Reason Foundation - Policy Areashttp://www.reason.org/areas
info@reason.org (Reason Foundation)http://www.pjdoland.com/chai/?v=0.1Privatize those golf courses already! http://www.reason.org/blog/show/privatize-those-golf-courses-alread
<p>Government owned golf courses are a real head scratcher. They serve no public interest that is not already served well by the private sector. Indeed, they are most often a nice subsidy for relatively wealthy golfers, paid for by all the non-golfing taxpayers. A lot of local governments are selling their golf courses, and more are at least hiring a private firm to run the golf course and stop it bleeding red ink.</p>
<p>I wrote two columns about the struggles of my hometown--Sarasota, FL--with its run-down, money-losing city-owned golf course when special interests in the form of golfers started lobbying for the city to spend millions of dollars to upgrade the course. &nbsp; By the way, I am a golfer and would never play the crappy city owned course when there are so many nice courses in the area that don't cost much more to play. &nbsp;Anyway, in <a href="http://www.yourobserver.com/article/my-view-bobby-jones-sell-it">the first column</a>, I point out the city has four opitions--pretty typical for&nbsp;local governments who own golf courses:</p>
<p style="padding-left: 30px;"><em>1) Current operations: Lose $200,000 or more per year; try to find money to fund improvements.</em></p>
<p style="padding-left: 30px;"><em>2) Privatize operations of the course based on fees paid elsewhere: $200,000 to $400,000 per year in revenue to the city.</em></p>
<p style="padding-left: 30px;"><em>3) Sell the golf course to a private golf course operator &mdash; based on average U.S. sales price for 18-hole golf courses of $4.25 million, about $10 million in sales revenue plus another $200,000-$400,000 per year in new taxes paid by the private owner.</em></p>
<p style="padding-left: 30px;"><em>4) Sell the land &mdash; a conservative estimate of $300 million in sales revenue for the 325-acre complex, plus around $2 million per year in new property tax revenue (based on 1,500 units at about $1,300 per unit per year).</em></p>
<p>I concluded that options 3 and 4 are clearly the best. But when the city stayed stuck on option 1 even as the price tag for improvements rose to $14.5 million, I wrote <a href="http://www.yourobserver.com/article/sensible-path-bobby-jones-golf-club">a second column</a>&nbsp;digging deeper into option 2 and pointing out some great examples from other local governments:</p>
<p style="padding-left: 30px;"><em>In 2002, Chicago&rsquo;s Cook County owned a golf course that for nearly a decade was losing money, had fewer players, deteriorating course conditions and rising customer complaints. Hmm. Sound familiar? The county brought in a private company to take over the golf course, which rebuilt and refurbished facilities and the course, brought in staff, replaced old equipment and carts, and turned the course around. The county went from losing $2 million per year on the course to an annual profit ranging between $800,000 to $1.5 million.</em></p>
<p style="padding-left: 30px;"><em>Two years ago, Phoenix approved a 30-year lease of the city-owned Maryvale Municipal Golf Course, which had run up millions of dollars in deficits over years, draining over $250,000 out of the general fund each year. Facilities had fallen into grave disrepair. Again, this sounds very familiar. The new private managers took on all operating costs and invested $8 million for course repairs and an upgraded clubhouse, and it will pay the city of Phoenix 10% of net revenues after it recoups its upfront investment. This arrangement worked so well Phoenix went on to privatize six other city-owned golf courses. </em></p>
<p>Way back in 1999 Reason published <a href="http://reason.org/files/4dc95a436314b48a83dc22aede430a63.pdf">a how to guide for privatizing golf courses</a>&nbsp;full of examples. &nbsp;It's past time more governments took heed and get out of the golf course management business and maybe focus on some higher priorities.&nbsp;</p>1014635@http://www.reason.orgMon, 26 Sep 2016 10:30:00 EDTadrian.moore@reason.org (Adrian Moore)Combatting the Recreational River "User Fees" Bogeymanhttp://www.reason.org/news/show/privatization-user-fees-rivers
<p>A recent <a href="http://www.americanrivers.org/blog/congress-plan-to-privatize-rivers-will-paddlers-be-paying-to-degrade-their-rivers/">blog post</a> from American Rivers, a public advocacy group in favor of free-flowing rivers, sounds the alarm about what it dubs &ldquo;Congress&rsquo; Plan to Privatize Rivers.&rdquo; This &ldquo;plan to privatize&rdquo; rivers is a reference to a Public Private Partnership Pilot Program that was inserted into the <a href="https://www.congress.gov/113/bills/hr3080/BILLS-113hr3080enr.pdf">Water Resources Reform and Development Act of 2014</a> (WRRDA). The pilot program was proposed with the goal of promoting public-private partnerships (PPPs) and increasing the role of private investment in the nation&rsquo;s water infrastructure&mdash;specifically locks and dams, which are <a href="http://www.nytimes.com/2015/02/05/us/barges-sit-for-hours-behind-locks-that-may-take-decades-to-replace.html?emc=eta1&amp;_r=1">badly underfunded</a> and deteriorating.</p>
<p>Putting aside American Rivers&rsquo; false equivalency between PPPs and full-scale <a href="http://reason.org/news/show/private-cure-waterway-infrastructur">privatization</a>, the most eye-catching anti-privatization argument in the blog post is the suggestion that privatization of locks and dams should be resisted because it would lead to a &ldquo;tax on all recreational boaters&mdash;including paddlers.&rdquo; This fear stems from a fall 2015 <a href="http://www.americanrivers.org/wp-content/uploads/2016/01/P3-Proposal.pdf?b9fce7">draft public-private partnership proposal</a> for Mississippi River infrastructure that states: &ldquo;All beneficial users of the locks and dams could have tariff rules and rates applied to the added value from water use.&rdquo;</p>
<p>It is of course true that a privatized system of locks and dams would mean that river users, such as barges and other boats, would have to pay usage fees in much the same way drivers pay highway tolls. These fees, however, serve an important function. Given that there are often multiple, conflicting users of waterways, an efficient user fee system best ensures that waterways achieve their best and highest valued use. When private owners purchase infrastructure like a lock or a dam, they assume an investment risk and therefore must be allowed to recover the cost of their investment. In exchange, the private investors provide critical funding to maintain the locks and dams that they control, which in turn ensures safer and more efficient river travel for everyone.</p>
<p>User fees charged to <em>commercial</em> river users are not what concerns American Rivers, which only focuses on the perceived horror of <em>recreational</em> users being forced to &ldquo;pay for&rdquo; the &ldquo;privilege&rdquo; of paddling down the Mississippi. While this argument may tug at the heartstrings of kayakers and canoers everywhere, it is not well a thought-out position. In fact, there are many good reasons why <em>all</em> users&mdash;even recreational ones&mdash;should be expected to contribute user fees for the maintenance of our nation&rsquo;s water infrastructure.</p>
<p>First of all, recreational users derive special benefits from locks and dams. While all Americans benefit from the enhanced river transportation that is made possible by the presence of locks and dams (in the form of better access to goods and products), recreational users derive special, particularized benefits from this infrastructure. Since locks and dams help smooth and widen uneven portions of rivers, they give recreational users the ability to easily steer clear of large barges and other fast-moving vessels. This makes for a more enjoyable river experience for all river users&mdash;especially recreational ones. The longstanding policy of the Office of Management and Budget on user fees, laid out in Circular No. A-25, states that &ldquo;[a] user charge will be assessed against each identifiable recipient for special benefits derived from Federal activities beyond those received by the general public.&rdquo; Based on this beneficiary-pays principle, both recreational and commercial river users should be expected to pay user fees for the special benefits they derive from the presence of locks and dams.</p>
<p>Furthermore, user fees for recreational activities on federal land and waterways are not unique. As anyone who has visited a national park can attest, the National Park Service charges user fees for many of the activities that take place within park boundaries. User fees <a href="http://www.nps.gov/apis/planyourvisit/upload/fee_schedule.PDF">are levied on nearly every pursuit</a> one can engage in at a park, including camping, docking, parking, and even just entering the park. Similarly, hunters and fishers that wish to hunt on federal land usually are required to pay the equivalent of a user fee in the form of a <a href="http://www.fws.gov/uploadedFiles/Firearms Brochure 2015.pdf">permit</a> or a <a href="http://www.nps.gov/yell/planyourvisit/fishingpermits.htm">license</a>. All these fees can be justified under the same beneficiary-pays model discussed above since the users who pay the fees are deriving specialized benefits beyond those that are received by the general public.</p>
<p>Rather than viewing the fees as objectionable, most park-goers rightly recognize that modest user fees are used, in part, to <a href="http://www.gao.gov/assets/680/674187.pdf">maintain the parks</a>, thereby ensuring that they stay open and accessible to the public for years to come.</p>
<p>It&rsquo;s also important to note that the amount of the user fee charged to a river user will vary depending on the government&rsquo;s cost of providing the identifiable recipient&rsquo;s benefit. Just as semi-trucks are charged higher tolls than small cars at tollbooths, barges and large commercial vessels will face higher user fees when they traverse a lock or dam than someone floating down the river on paddleboard. This is because commercial users will derive a greater benefit from the presence of the lock or dam than mere recreational users.</p>
<p>Some might worry that even low user fees will create a <em>de facto</em> barrier of entry for lower-income Americans interested in using our nation&rsquo;s rivers for recreational purposes. Such concerns ignore the fact that oftentimes travel costs are <a href="http://reason.org/files/0b6c6302bfcc621638fcdbdebec8b63a.pdf">as much or more of a barrier</a> to using public lands than user fees for the poor. Additionally, there is <a href="http://reason.org/files/0b6c6302bfcc621638fcdbdebec8b63a.pdf">ample research</a> suggesting that low-income populations overwhelmingly support the concept of recreational user fees. It may even be possible to structure a locks and dams user fee system in a way that allows those who are genuinely unable to afford the fee to apply for an exemption, although if the fee is modest it should present no more of a barrier to the use of public waters than federal fishing or hunting licenses do to the use of public lands.</p>
<p>It&rsquo;s worth pointing that very few inland rivers in America would even be affected by lock and dam user fees since locks and dams are most often located only on large rivers used for commercial transit. The <a href="http://prod-http-80-800498448.us-east-1.elb.amazonaws.com/w/images/2/2c/Federal_Hydropower_-_U..S._Army_Corps_of_Engineers.pdf">Army Corps of Engineers</a> &ldquo;operates and maintains 12,000 miles of inland and intracoastal waterway navigable channels, including 192 commercial lock and dam sites.&rdquo; For comparison, American Rivers <a href="http://www.americanrivers.org/rivers/about/">itself notes</a> that there are 250,000 rivers in the United States, totaling 3.5 million river miles, which means that only .003% of river miles have locks and dams on them. That leaves a lot of river miles leftover for &ldquo;free&rdquo; paddling.</p>
<p>This is not to say that charging modest user fees to recreational river users that traverse locks and dams would be without challenges. One administrative concern would be enforcement&mdash;a kayaker, for example, could plan routes that avoid locks and dams, or even choose to portage around them. But these same drawbacks apply with equal force to toll roads (i.e., drivers often take back roads to avoid them), and merely underscore the importance of not setting fees so high as to incentivize users to go extreme lengths to avoid them.</p>
<p>Ultimately, Americans need to understand that, one way or the other, they <em>will</em> end up paying for the maintenance of our country&rsquo;s water infrastructure system. Far from being &ldquo;free,&rdquo; the status quo&mdash;crumbling locks and dams&mdash;benefits neither commercial nor recreational river users. If the problem is not addressed now via solutions like privatization and user fees, Americans will face the prospect of having their taxes raised to pay for water infrastructure rehabilitation down the road. Worst of all, given persistent Congressional inaction, these tax hikes would most likely be instituted only after some event forced Congress&rsquo;s hand (such as a dam bursting), meaning that the cost of rehabilitation would end up much higher than it is today. The better option is instituting a more efficient and affordable system in which all river users pay fees commensurate with the benefits they derive.</p>
<p>Under the <a href="http://www.taxpayer.net/user_uploads/file/Transportation/Trust Funds/IWTF - TCS - FINAL 2012-01-18.pdf">current system</a>, the Inland Waterways Trust Fund&mdash;funded by a 29-cent per-gallon diesel fuel tax&mdash;finances 50% of the costs of new dam and lock construction (as well as major rehabilitation projects), with the remaining 50% coming from general taxes paid by all Americans. But neither commercial cargo vessels nor recreational river users contribute the first nickel to lock and dam <em>maintenance and operations</em>, 100% of which comes from general taxpayers. Instead of this inefficient, under-funded, and costly system, a true beneficiary-pays model should be considered.</p>
<p>Although <a href="http://reason.org/news/show/private-cure-waterway-infrastructur">some form of privatization (or public-private partnership)</a> would be the best solution for America&rsquo;s crumbling water infrastructure, the Army Corps of Engineers itself can take action. In OMB&rsquo;s Circular No. A-25, each agency is required to &ldquo;[r]eview the user charges for agency programs biennially, to include: (1) assurance that existing charges are adjusted to reflect unanticipated changes in costs or market values; and (2) a review of all other agency programs to determine whether fees should be assessed for Government services or the user of Government goods or services.&rdquo; Therefore, the Corps, in its next biennial review, should recommend that Congress implement and authorize a beneficiary-pays user fee model to help fund both the capital and operating expenses associated with the river locks and dams.</p>
<p>The benefits of a beneficiary-pays system would include reduced river congestion and reduced tax burdens on non-river-using general taxpayers. In the face of deteriorating river infrastructure and a $19 trillion federal deficit, the implementation of a modest user fee system is really the only option left. Rather than being a bad thing like American Rivers suggests, it could make a big difference in addressing our nation&rsquo;s water infrastructure funding shortfall.</p>
<p><em>William B. Newman, Jr. (wbnewmanjr&#64;hotmail.com) is Senior Advisor to HC Project Advisors in Washington, D.C. C. Jarrett Dieterle (jdieterle&#64;harkinscunningham.com) is an attorney at Harkins Cunningham LLP in Washington, D.C.</em></p>1014481@http://www.reason.orgMon, 07 Mar 2016 14:19:00 ESTinfo@reason.org (William Newman)Harness Public-Private Partnerships for National Park Infrastructure Needshttp://www.reason.org/blog/show/national-park-maintenance-backlog
<p>The Property and Environment Research Center (PERC) recently released a new report&mdash;<a href="http://www.perc.org/articles/BreakingtheBacklog"><em>Breaking the Backlog: 7 Ideas to Address the National Park Deferred Maintenance Problem</em></a>&mdash;offering several creative ideas to address the <a href="http://www.nps.gov/subjects/plandesignconstruct/defermain.htm">$11.9 billion backlog of deferred infrastructure maintenance</a> in our national parks. The reforms would enable parks to become more self-sufficient and less reliant on Congress for annual appropriations as the National Parks System nears its centennial anniversary.</p>
<p>The PERC report includes an article I penned recommending that the National Parks Service explore the use of infrastructure public-private partnerships to help tackle the maintenance backlog. Here's an excerpt:</p>
<blockquote>Roads and other transportation infrastructure make up half of the deferred maintenance backlog in national parks. With the agency's centennial fast approaching, the National Park Service should consider creative partnerships with the private sector to address these challenges and ensure park infrastructure is sustainable in the agency's second century, not marred by chronic deterioration.<br /><br />The National Park Service can look to states and local governments for inspiration on how to deal with their infrastructure challenges. Over the past several decades, state and local governments have turned to public-private partnerships to tap into private-sector capital and expertise. This allows them to stretch limited tax dollars further, often by outsourcing maintenance activities to the private sector to lower costs.</blockquote>
<p>The full article is <a href="http://reason.org/news/show/national-parks-infrastructure-ppp">available here</a>, and the PERC report is <a href="http://www.perc.org/articles/BreakingtheBacklog">available here</a>.</p>1014462@http://www.reason.orgTue, 23 Feb 2016 12:42:00 ESTleonard.gilroy@reason.org (Leonard Gilroy)Harness Public-Private Partnerships for National Park Infrastructure Needshttp://www.reason.org/news/show/national-parks-infrastructure-ppp
<p>Roads and other transportation infrastructure make up half of the deferred maintenance backlog in national parks.<sup><a href="#refE1">1</a><a name="citeE1"></a></sup> With the agency's centennial fast approaching, the National Park Service should consider creative partnerships with the private sector to address these challenges and ensure park infrastructure is sustainable in the agency's second century, not marred by chronic deterioration.</p>
<p>The National Park Service can look to states and local governments for inspiration on how to deal with their infrastructure challenges. Over the past several decades, state and local governments have turned to public-private partnerships to tap into private-sector capital and expertise. This allows them to stretch limited tax dollars further, often by outsourcing maintenance activities to the private sector to lower costs.</p>
<p>A recent example of this approach comes from Pennsylvania's Rapid Bridge Replacement Project, a partnership to reconstruct 558 structurally deficient bridges statewide in one fell swoop.<sup><a href="#refE2">2</a><a name="citeE2"></a></sup> A private consortium is financing the $899 million project and is managing the design, construction, and maintenance of the bridges under one comprehensive contract. The consortium will maintain each bridge for 25 years after completion and will be repaid by the state through an annual payment over that same time period to keep costs manageable for taxpayers.</p>
<p>The state estimates that bundling the work will cut costs by 20 percent relative to a more traditional approach. The contract model incentivizes proper maintenance, transfers major financial and long-term operational risks to the private partner, and ensures that the work is done now. &#65532;</p>
<p>The National Park Service should consider the potential of using similar models to address its transportation backlog across one or more parks. At the same time, the National Park Service's authorizing legislation and policies should be modernized to give the agency maximum flexibility in crafting innovative partnerships. Though the agency can already make use of some types of infrastructure public-private partnerships, a 2013 report notes that "federal statues and NPS policies place limitations on these types of partnerships."<sup><a href="#refE3">3</a><a name="citeE3"></a></sup></p>
<p>In addition, the National Park Service should explore public-private partnerships to address related infrastructure challenges such as water and wastewater system projects, which together make up $693 million in deferred maintenance.<sup><a href="#refE4">4</a><a name="citeE4"></a></sup></p>
<p>Public-private partnerships can provide a powerful means of stretching parks' limited funds further. The National Park Service could begin assessing the potential for infrastructure partnerships in a low-cost, low-risk way by issuing an open-ended request for information, seeking big-picture concepts from the private sector on how to tackle the maintenance backlog. The Park Service can use the feedback to refine its thinking and develop more concrete proposals.</p>
<p>Although public-private partnerships cannot solve every problem, they can play an important role in improving infrastructure and reducing the backlog in our national parks. Given the National Park Service's current state of disrepair&mdash;and the prospect that the next century could be one of decline if nothing changes&mdash;all solutions should be on the table.</p>
<p>[Read more: "Breaking the Backlog: Can Public-Private Partnerships Tackle the Park Maintenance Backlog?" by Leonard Gilroy. <em>PERC Reports</em>. Vol. 34, No. 1 (2015). Available at <a href="http://www.perc.org/articles/breaking-backlog">perc.org</a>.]</p>
<p><em>Leonard Gilroy is director of government reform at Reason Foundation. This article was originally published by the Property and Environment Research Center in its February 2016 report</em>, <a href="http://www.perc.org/sites/default/files/pdfs/BreakingtheBacklog_7IdeasforNationalParks.pdf">Breaking the Backlog: 7 Ideas to Address the National Park Deferred Maintenance Problem</a>.</p>
<p><strong>Endnotes</strong>:</p>
<p><a name="refE1"></a><sup><a href="#citeE1">1</a></sup> National Park Service. "NPS Asset Inventory." <a href="http://www.nps.gov/subjects/plandesignconstruct/upload/FY-2015-NPS-Asset-Inventory-Summary-2016-01-11.pdf">http://www.nps.gov/subjects/plandesignconstruct/upload/FY-2015-NPS-Asset-Inventory-Summary-2016-01-11.pdf</a>.</p>
<p><a name="refE2"></a><sup><a href="#citeE2">2</a></sup> Pennsylvania RBR Project. <a href="http://parapidbridges.com">http://parapidbridges.com</a>.</p>
<p><a name="refE3"></a><sup><a href="#citeE3">3</a></sup> "NPS Transportation Innovative Finance Options." U.S. Department of Transportation, Research and Innovative Technology Administration, prepared for U.S. Department of the Interior, National Park Service. (May 2013). <a href="http://www.nps.gov/transportation/pdfs/NPS_Innovative_Finance.pdf">http://www.nps.gov/transportation/pdfs/NPS_Innovative_Finance.pdf</a>.</p>
<p><a name="refE4"></a><sup><a href="#citeE4">4</a></sup>National Park Service. &ldquo;NPS Asset Inventory.&rdquo; <a href="http://www.nps.gov/subjects/plandesignconstruct/upload/FY-2015-NPS-Asset-Inventory-Summary-2016-01-11.pdf">http://www.nps.gov/subjects/plandesignconstruct/upload/FY-2015-NPS-Asset-Inventory-Summary-2016-01-11.pdf</a>.</p>1014460@http://www.reason.orgTue, 23 Feb 2016 11:06:00 ESTleonard.gilroy@reason.org (Leonard Gilroy)Massive Maintenance Backlog Threatens California's National Parkshttp://www.reason.org/news/show/massive-maintenance-backlog-threate
Orange County Register <p>The National Parks System turns 100 next year, and our parks are deteriorating faster than we can fix them, threatening the long-term viability of these significant resources.</p>
<p>State parks controlled by California need over $1 billion in maintenance that the government has delayed. And a new report from the federal National Park Service estimates that its assets in California &ndash; which include national parks, national monuments and national recreation areas &ndash; have a $1.72 billion maintenance backlog.</p>
<p>Yosemite National Park has already put off $553 million in maintenance needs, including $277 million in road and bridge repairs, almost $97 million in water and sewer system repairs and over $101 million to repair more than 800 park buildings.</p>
<p>Closer to home, Southern California&rsquo;s Joshua Tree National Park needs almost $67 million to fix its roads and bridges and $3.8 million to repair trails. The Death Valley and Sequoia and Kings Canyon National Parks face approximately $343 million in combined maintenance needs. Even the Cabrillo National Monument in San Diego has $5 million in overdue maintenance.</p>
<p>Parks aren&rsquo;t just pretty open spaces. For the public to access and use them they requires roads, bridges, water and sewer systems, buildings, trails and other infrastructure. But federal and state governments keep putting off these basic maintenance and upkeep projects. Just like not patching a hole in your roof today will lead to bigger, more costly home repairs in the future, not fixing cracked roads and broken sewer systems in parks steadily degrades the parks, the visitor experience and can ultimately harm environmental quality.</p>
<p>Making this situation more acute is the fact that parks have become a perennial loser in the budget game. At the state level, spending on education, health care, higher education and corrections crowds out spending on &ldquo;nice to have&rdquo; amenities like parks.</p>
<p>At the federal level, entitlements like Social Security and Medicare, and military spending take up major portions of the budget. Funding for national parks has been on the decline for the last decade, and even though the Obama administration has proposed increasing national parks spending by over $400 million in the coming year, it&rsquo;s unlikely to pass the Republican-controlled House of Representatives. And even if the president&rsquo;s plan passed, it would be just a drop in the bucket compared with the system&rsquo;s $11.5 billion in maintenance needs.</p>
<p>While there are no easy solutions, three key things must happen to ensure the viability of the National Parks System for another century.</p>
<p>First, we need to stop waiting for more taxpayer dollars that aren&rsquo;t coming and get comfortable with the idea of making park users pay more to visit them. The current efforts by the National Park Service to increase user fees across its system &ndash; the first proposed increases in almost a decade &ndash; are a good step in that direction. Experts at the Property and Environment Research Center have long noted that even if park visitor fees are increased, the parks will remain a great bargain and price increases will likely have little effect on overall visitation.</p>
<p>Second, the system needs to dig deeper to find more cost savings and opportunities to partner with the private sector. In some cases, this may mean outsourcing activities currently done by the government, in others it may mean bundling maintenance contracts across multiple parks to get better value, and, in others, it could mean seeking an infusion of private capital in return for long-term asset maintenance contracts.</p>
<p>Third, politicians need to stop irresponsibly adding parks to a system that is already overburdened. Legislation enacted by Congress last year added seven new national parks and expanded several others. Earlier this year, the Obama administration designated three new national monuments. If you can&rsquo;t afford what you&rsquo;ve already got, it&rsquo;s folly to add even more.</p>
<p>With their centennial approaching, there will be much focus on the parks&rsquo; history and legacy. But let&rsquo;s hope that this look back doesn&rsquo;t overshadow the fact that the status quo is unsustainable. The operating model for national parks is going to have to change significantly if they&rsquo;re going to survive another century.</p>
<p><em>Leonard Gilroy is director of government reform at Reason Foundation. This article originally appeared in the <a href="http://www.ocregister.com/articles/parks-656650-national-maintenance.html">Orange County Register</a>.</em></p>1014213@http://www.reason.orgMon, 13 Apr 2015 09:15:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Annual Privatization Report 2014http://www.reason.org/news/show/annual-privatization-report-2014
<p>Now in its 27th year of publication, Reason Foundation's <em>Annual Privatization Report</em>&nbsp;is the world's longest running and most comprehensive report on privatization news, developments and trends.</p>
<p><em>Annual Privatization Report 2014</em>&nbsp;details the latest on privatization and government reform initiatives at all levels of government. The individual sections include:</p>
<ul>
<li><a href="http://reason.org/news/show/apr-2014-local-privatization">Local Government Privatization</a></li>
<li><a href="http://reason.org/news/show/apr-2014-state-privatization">State Government Privatization</a></li>
<li><a href="http://reason.org/news/show/apr-2014-federal-privatization">Federal Government Privatization</a></li>
<li><a href="http://reason.org/news/show/apr-2014-education" target="_blank">Education</a></li>
<li><a href="http://reason.org/news/show/apr-2014-air-transportation" target="_blank">Air Transportation</a></li>
<li><a href="http://reason.org/news/show/apr-2014-surface-transportation" target="_blank">Surface Transportation</a></li>
<li><a href="http://reason.org/news/show/apr-2014-transportation-finance" target="_blank">Transportation Finance</a></li>
<li><a href="http://reason.org/news/show/apr-2014-criminal-justice" target="_blank">Criminal Justice and Corrections</a></li>
</ul>
<p>Your comments on <em>Annual Privatization Report 2014</em> are important to us. Please feel free to contact us with questions, suggestions or for more information. For the most up-to-date information on the rapidly changing privatization world, please visit Reason's <a href="/areas/topic/privatization">privatization research archive</a>, and sign up for our monthly <a href="http://reason.org/newsletters/privgovreform/">Privatization &amp; Government Reform Newsletter</a>.</p>
<p>Leonard C. Gilroy, Editor<br />Director of Government Reform, Reason Foundation<br /><a href="mailto:leonard.gilroy&#64;reason.org">leonard.gilroy&#64;reason.org</a></p>1013767@http://www.reason.orgMon, 23 Jun 2014 00:00:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Privatization & Government Reform Newsletter #3 (Jan 2014 edition)http://www.reason.org/blog/show/privatization-reform-newsletter3
<p>The January 2014 edition of the <em>Privatization &amp; Government Reform Newsletter</em> is <a href="http://reason.org/news/show/privatization-reform-news-3">now online</a>. Topics covered in this issue include:</p>
<ul>
<li>STATES: Sampling the State of the State Speeches</li>
<li>EDUCATION: Houston Reducing Achievement Gaps Under Student-Based Budgeting</li>
<li>PUBLIC HEALTH: Rush to Regulate E-Cigarettes May Harm Public Health</li>
<li>PENSIONS: Rhode Island Pension Reform Case Study</li>
<li>SOCIAL FINANCE: New York Launches Social Impact Bond Program</li>
<li>LOTTERIES: Pennsylvania Ends Procurement for Private Lottery Management</li>
<li>PRISONS: The Challenge of Public/Private Cost Comparisons</li>
<li>INNOVATORS IN ACTION: Pioneering Road User Charges in Oregon</li>
<li>News &amp; Notes</li>
<li>Quotable Quotes</li>
</ul>
<p>The full newsletter is <a href="http://reason.org/news/show/privatization-reform-news-3">available here</a>, and previous editions of the newsletter are <a href="http://reason.org/newsletters/privgovreform/">available here</a>.</p>1013718@http://www.reason.orgWed, 29 Jan 2014 17:31:00 ESTleonard.gilroy@reason.org (Leonard Gilroy)Privatization & Government Reform Newsletter #3http://www.reason.org/news/show/privatization-reform-news-3
<p><strong>In this issue:</strong></p>
<ul type="disc">
<li>STATES: <a href="#a">Sampling the State of the State Speeches</a></li>
<li>EDUCATION: <a href="#b">Houston Reducing Achievement Gaps Under Student-Based Budgeting</a></li>
<li>PUBLIC HEALTH: <a href="#c">Rush to Regulate E-Cigarettes May Harm Public Health</a></li>
<li>PENSIONS: <a href="#d">Rhode Island Pension Reform Case Study</a></li>
<li>SOCIAL FINANCE: <a href="#e">New York Launches Social Impact Bond Program</a></li>
<li>LOTTERIES: <a href="#f">Pennsylvania Ends Procurement for Private Lottery Management</a></li>
<li>PRISONS: <a href="#g">The Challenge of Public/Private Cost Comparisons</a></li>
<li>INNOVATORS IN ACTION: <a href="#h">Pioneering Road User Charges in Oregon</a></li>
<li><a href="#i">News &amp; Notes</a></li>
<li><a href="#j">Quotable Quotes</a></li>
</ul>
<hr />
<p><strong><a name="a"></a>STATES: Sampling the State of the State Speeches</strong></p>
<p>With President Obama&rsquo;s State of the Union address getting major attention this week, it&rsquo;s easy to forget that over a dozen state governors have also been busy in recent weeks giving their annual State of the State speeches. Looking across a representative sample of six recent State of the State speeches&mdash;three from "blue" states (California, New York and Colorado) and three from "red" states (Wisconsin, Indiana and Georgia)&mdash;some common policy themes emerge, including tax reform, government reform, increasing rainy day fund balances, education and infrastructure. <span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/news/show/2014-state-of-the-states">FULL ARTICLE</a></span></p>
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<p><strong><a name="b"></a>EDUCATION: Report Ranks Houston Tops In Reducing Achievement Gaps Under Student-Based Budgeting</strong></p>
<p>In the United States, state and local education funding systems are increasingly adopting a &ldquo;school funding portability&rdquo; framework, where funding is attached to the students and &ldquo;follows the child&rdquo; to the school he or she attends. While this goes by several names&mdash;including weighted student formula, results-based budgeting, student-based budgeting, &ldquo;backpacking&rdquo; or fair-student funding&mdash;in every case the meaning is the same: dollars rather than staffing positions follow students into schools. A new Reason Foundation report examines 14 school districts currently using portable student funding, ranking each district in 10 categories, including test scores, achievement gaps, graduation rates, and transparency. It also recommends a series of &ldquo;best practices&rdquo; for districts, including publishing school report cards for parents, using performance-based pay for teachers and principals, allowing students to enroll in any school in the district, and giving principals control over their hiring and budgets. <span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/studies/show/weighted-student-formula-yearbook">FULL REPORT</a></span></p>
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<p><strong><a name="c"></a>PUBLIC HEALTH: Rush to Regulate E-Cigarettes May Harm Public Health, Anti-Smoking Efforts</strong></p>
<p>Despite a recent Reason/Rupe poll that found that 62 of Americans support governments allowing the use of e-cigarettes in public places, cities like New York City and Chicago have recently enacted ordinances to include e-cigarette &ldquo;vaping&rdquo; in existing public smoking bans. Further, over the last year there has been a wave of local regulations enacted or proposed across the country to restrict the sale or use of e-cigarettes. In a recent <em>Orange County Register</em> commentary, I discuss how the misguided rush to limit the sale or use of e-cigarettes is more likely to harm public health instead of benefit it, primarily by making it more difficult for smokers to transition to safer nicotine delivery alternatives, thus keeping them smoking longer.<br /><span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/news/show/e-cigarette-regulation-harm">FULL ARTICLE</a></span><br /><span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.com/blog/2013/12/13/poll-americans-dont-want-to-ban-trans2">REASON/RUPE POLL RESULTS</a></span></p>
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<p><strong><a name="d"></a>PENSIONS: Rhode Island Pension Reform Case Study</strong></p>
<p>In 2011, Rhode Island enacted major pension reform legislation spearheaded by State Treasurer and current gubernatorial candidate Gina Raimondo to address an unfunded pension liability of $6.8 billion and a system less than 50 percent funded relative to its obligations. Among the changes, the reforms introduced a hybrid defined-benefit/defined-contribution funding system, suspended cost-of-living-adjustments for retirees, and increased the retirement age. A new Reason Foundation report offers a detailed case study of Rhode Island&rsquo;s pension reform efforts, reviewing the challenges that prompted the reforms, the specific policies enacted, and the lessons learned for other states and municipalities facing significant unfunded pension liabilities. <span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/news/show/pension-reform-rhode-island">FULL REPORT</a></span></p>
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<p><strong><a name="e"></a>SOCIAL FINANCE: New York Launches First State-Level Social Impact Bond Program</strong></p>
<p>The concept of social impact bonds&mdash;in which the private sector finances and implements new social service delivery models on behalf of governments under a pay-for-success contract model&mdash;has been advancing rapidly in the U.S. in recent months. New York State recently announced the first state-level social impact bond program, which is aimed at reducing recidivism among recently released inmates. Additionally, legislators in New Jersey and Washington State are seeking to launch social impact bond pilots. <span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/news/show/new-york-social-impact-bond">FULL ARTICLE</a></span></p>
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<p><strong><a name="f"></a>LOTTERIES: Pennsylvania Ends Procurement for Private Lottery Management</strong></p>
<p>All of the 44 states that operate lotteries currently outsource certain components of their internal lottery operations, but three states&mdash;Illinois, Indiana and New Jersey&mdash;have taken privatization further in recent years by entering into private management agreements (PMAs) with private service providers designed to increase net lottery revenues to the state as a means of augmenting traditional tax revenues. Privatized lottery management took a different course in Pennsylvania, however, where last month Gov. Tom Corbett&rsquo;s administration announced that it was abandoning a PMA negotiated the previous year that got stalled amid union and legislative opposition and a rejection of the contract by the state&rsquo;s attorney general in early 2013. <span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/news/show/pennsylvania-private-lottery">FULL ARTICLE</a></span></p>
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<p><strong><a name="&ldquo;g&rdquo;"></a>PRISONS: The Challenge of Public/Private Cost Comparisons</strong></p>
<p>There is an ongoing debate over the relative cost of public and private prison operations, with some research suggesting that governments can save money through public-private partnerships and other research finding that the cost difference is negligible or that public sector delivery is cheaper. One of the primary reasons for this disparity is different budgeting and accounting practices in the public and private sectors, which make &ldquo;apples-to-apples&rdquo; comparisons difficult and often distort cost comparisons in favor of the public sector. A new Reason Foundation policy brief examines this issue, using a 2011 Arizona Department of Corrections report as a case study. Though the report was interpreted as showing that privately-operated prisons are costlier than public ones in Arizona, it suffers from a variety of methodological shortcomings, including deficient treatment of capital assets and liabilities, retiree healthcare and pension costs for public employees, inmate healthcare costs, transferred legal risks, and taxes paid to state and local government. The Reason brief finds that rigorous cost comparisons must be undertaken carefully, lest they muddy the debate at the expense of sound policymaking. <span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/studies/show/the-challenge-of-comparing-public-a">FULL POLICY BRIEF</a></span></p>
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<p><strong><a name="&ldquo;h&rdquo;"></a>INNOVATORS IN ACTION: Pioneering Road User Charges in Oregon</strong></p>
<p>The latest installment of Reason Foundation's <em>Innovators in Action</em> monthly interview series&mdash;which profiles innovative policymakers in their own words, highlighting good government efforts delivering real results and value for taxpayers&mdash;examines Oregon&rsquo;s work in recent years to advance the concept that may ultimately replace the beleaguered gas tax: mileage-based road user charges. I recently interviewed James Whitty, manager of the Oregon DOT&rsquo;s Office of Innovative Partnerships and Alternative Funding, on what prompted Oregon policymakers to explore road user charges, the evolution of the state&rsquo;s pilot programs, how Oregon has addressed the public&rsquo;s concerns over protecting privacy, and much more. <span style="font-size: 80%;color: red;">&raquo; <a href="http://reason.org/news/show/oregon-road-user-charges">FULL INTERVIEW</a></span></p>
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<p><strong><a name="&ldquo;i&rdquo;"></a>NEWS &amp; NOTES</strong></p>
<p><span style="text-decoration: underline;"><em>The Economist</em> on Divesting Government Assets</span>: I was honored to be cited in an article in the January 11th <a href="http://www.economist.com/printedition/2014-01-11">print edition</a> of <em>The Economist</em> on the topic of divesting government-owned assets. The article cited a surge in the privatization of state-owned assets in emerging economies in recent years and suggested that advanced OECD economies take another look at their asset portfolios, as &ldquo;[s]elling some of these holdings could work wonders: reduce debt, finance infrastructure, boost economic efficiency.&rdquo; The full article is <a href="http://www.economist.com/news/briefing/21593458-advanced-countries-have-been-slow-sell-or-make-better-use-their-assets-they-are-missing">available here</a>.</p>
<p><span style="text-decoration: underline;">New Reason Foundation Study Recommends Organizational Reform of Air Traffic Control System</span>: Despite dramatic advances in technology, the basic features and procedures of the 1960s-era air traffic control (ATC) system have remained largely unchanged in the U.S. and have fallen well behind the capacity of new technologies to provide safer, faster, more reliable and more fuel-efficient air travel and to keep pace with the increasing volume of air traffic. A <a href="http://reason.org/news/show/organization-and-innovation-in-atc">new report</a> by Reason Foundation founder and transportation policy director Robert Poole published by the Hudson Institute finds that fundamental reform of the U.S. air traffic system&rsquo;s funding and governance is the key to a full embrace of cutting-edge air traffic management in this country. It&rsquo;s worth noting that ATC providers in many other countries have embraced the new technologies and procedures recommended by Poole much more readily than we have in the U.S.&mdash;including providers in Australia, New Zealand, Canada, Germany and the UK&mdash;and are seeing superior performance.</p>
<p><span style="text-decoration: underline;">New Reason/Buckeye Institute Study Recommends Public-Private Partnerships to Operate State Parks</span>: Reason Foundation and the Ohio-based Buckeye Institute released a study in December making the case that one way to keep cash-strapped state parks open without imposing additional burdens on the taxpayer is to utilize public-private partnerships. Many states already use private concessionaires to provide piecemeal services within parks (e.g., food, retail, lodging, marinas, etc.) so a shift to more extensive involvement can build on that. Whole park operation PPPs would transfer the responsibility of maintaining the park to a private operator while allowing them to collect entrance and other fees, paying the state an annual rent payment in return. The U.S. Forest Service has used this PPP model for over 25 years to operate hundreds of its developed recreation areas nationwide, and in 2012 California became the first state to turn over the operation of state parks to private recreation management companies to avoid closure. The full report is <a href="http://reason.org/news/show/parks-20-operating-state-parks-thro">available here</a>.</p>
<p><span style="text-decoration: underline;">Pennsylvania Seeking Innovative Public-Private Partnership for Bridges</span>: The Pennsylvania Department of Transportation (PennDOT) issued a request for qualifications in December 2013 seeking qualified private contractors for its <a href="http://www.p3forpa.pa.gov">Rapid Bridge Replacement Project</a>, a public-private partnership to reconstruct at least 500 structurally deficient bridges of similar design. The selected team will manage the bridges' design, construction and maintenance under one comprehensive contract to streamline project delivery, and it will finance the project in an availability-payment concession. The department anticipates significant cost savings since the same basic design and construction standards can be used for multiple bridges. The project will launch in 2015, and the selected team will also maintain the bridges for as much as 35 years. A Pennsylvania Department of Transportation spokesperson <a href="http://www.post-gazette.com/news/state/2014/01/21/PennDOT-offering-private-sector-a-partnership-to-fix-bridges/stories/201401210056">told the <em>Pittsburgh Post-Gazette</em> last week</a> that the initiative "gives us the ability to accelerate the delivery of 550 to 650 bridge replacements that otherwise wouldn't happen for 15 to 20 years if we were to use a traditional contracting model."</p>
<p><span style="text-decoration: underline;">Privatization of School Support Services on the Rise in Michigan</span>: The Mackinac Center for Public Policy&rsquo;s <em>Michigan School Privatization Survey 2013</em>, released last week, finds that 357 of Michigan&rsquo;s 545 local school districts (65.5%) contracted out for at least one of the three main non-instructional services&mdash;custodial, food, and transportation&mdash;in 2013, a figure that has more than doubled since the Center began publishing its annual study in 2001. The survey found that 45.5% of districts contracted with private companies for facilities maintenance and other custodial work, followed by food services at 36.5% and transportation at 21%. &ldquo;Every dollar saved through privatization is a dollar that can be redirected toward the classroom where it belongs,&rdquo; according to the Mackinac Center&rsquo;s James Hohman. The full report is <a href="http://www.mackinac.org/archives/2014/S2014-01.pdf">available here</a>.</p>
<p><span style="text-decoration: underline;">Oregon Liquor Privatization Push Begins</span>: In 2011, Washington State became the first of the 18 so-called liquor &ldquo;control states&rdquo;&mdash;those with state-run monopolies over the distribution and/or sale of distilled spirits&mdash;since the end of Prohibition to fully privatize its wholesale and retail monopolies, as discussed in the <a href="http://reason.org/news/show/privatization-reform-news-1">October edition</a> of this newsletter. But it may not be the last. In mid-December, a Northwest Grocery Association-backed group called Oregonians for Competition filed five different initiative petitions that would end the state-run liquor monopoly and expand the sale of distilled spirits to retail outlets over 10,000 square feet. Liquor sales are currently only allowed in state-sanctioned liquor stores, which would continue to operate under the various proposed ballot measures. The five measures are variations of a proposed Oregon Liquor Control Modernization Act, and Oregonians for Competition plans to choose one version to potentially take forward to the November 2014 ballot, <a href="http://www.oregonlive.com/politics/index.ssf/2013/12/liquor_privatization_battle_br_1.html">according to <em>The Oregonian</em></a>. The state&rsquo;s Liquor Control Commission is currently pushing the legislature to consider a modernization effort that could potentially forestall privatization, but early skepticism among legislators prompted <em>The Oregonian&rsquo;s</em> editorial board to <a href="http://www.oregonlive.com/opinion/index.ssf/2014/01/lawmakers_should_not_ignore_ne.html">recently suggest</a> that they should not &ldquo;be surprised in November when voters come to the sensible conclusion that government really shouldn&rsquo;t be in the booze-selling business.&rdquo;</p>
<p><span style="text-decoration: underline;">Rockefeller Institute Report on Defined-Benefit Pensions</span>: Regardless of where one stands on the issue of reforming public employee pension systems, I would commend to readers&rsquo; attention a new Rockefeller Institute of Government report by Donald Boyd and Peter Kiernan entitled, <em>Strengthening the Security of Public Sector Defined Benefit Plans</em>. Starting with the premise that defined-benefit pension systems &ldquo;can and should be structured to fund benefits securely,&rdquo; Boyd and Kiernan present a blistering critique of the &ldquo;bad incentives, inadequate rules, and little transparency&rdquo; that have contributed to the massive underfunding of public sector defined-benefit pensions, and they offer a series of recommendations designed to address these systemic flaws. Defenders of defined-benefit pensions and pension reform advocates alike will benefit from Boyd and Kiernan&rsquo;s analysis. The full report is <a href="http://www.rockinst.org/pdf/government_finance/2014-01-Blinken_Report_One.pdf">available here</a>.</p>
<p><span style="text-decoration: underline;">Privatizing Utah&rsquo;s State-Owned Golf Courses</span>: Provo&rsquo;s <em>Daily Herald</em> <a href="http://www.heraldextra.com/news/local/govt-and-politics/legislature/lawmaker-looking-to-privatize-state-golf-courses/article_46153d72-b708-5396-bf41-79ed7ba56cc5.htm">recently reported</a> that Utah State Rep. Kay Christofferson is planning to introduce a bill in the 2014 legislative session that would require the Department of Natural Resources to contract out the operations and maintenance of the four gold courses owned and operated by the state. A 2012 Utah State Parks report found that the four courses required taxpayer subsidies to cover operating and debt expenses. "Why are we competing against people that provide that service? Let's put it out for a [proposal] and see if we can get somebody to operate this privately," Christofferson told the <em>Herald</em>.</p>
<p><span style="text-decoration: underline;">Indianapolis Seeking Private Partners for Parks</span>: In November, Indianapolis issued a request for proposals seeking potential private for-profit or nonprofit partners to take over operations of parks, take over existing park facilities or programs, and/or propose new facilities or programs. The city is seeking opportunities to lower operating costs and potentially increase revenue through the solicitation. <a href="http://archive.indystar.com/article/20131122/NEWS05/311220025/Indy-Parks-renews-call-private-partners-invest-system">According to the <em>Indianapolis Star</em></a>, the city&rsquo;s $3.4 million annual park capital budget is unable to cover a $46 million backlog of facility improvements, much less the $51 million in new park facilities sought by the city. Proposals are due on January 31st.</p>
<p><span style="text-decoration: underline;">Solid Waste Privatization to Help Eliminate Deficits in Lawrence, IN</span>: A new contract with Republic Services for residential trash and recycling collection will save Lawrence, Indiana an estimated $5 million over the 10-year contract, helping the city eliminate its budget deficit, according to <a href="http://www.indystar.com/story/news/local/marion-county/2013/12/15/lawrence-contracts-with-republic-for-trash-recycling-service/4017901/">an article</a> last month in the <em>Indianapolis Star</em>. The company offered positions to all nine city sanitation employees and paid the city $300,000 for its trucks and waste containers, according to the article.</p>
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<p><strong><a name="&ldquo;j&rdquo;"></a>QUOTABLE QUOTES</strong></p>
<p>&ldquo;Governments of OECD countries still oversee vast piles of assets, from banks and utilities to buildings, land and the riches beneath (see table). Selling some of these holdings could work wonders: reduce debt, finance infrastructure, boost economic efficiency. But governments often barely grasp the value locked up in them.&rdquo;<br />&mdash;&ldquo;Setting out the store,&rdquo; <em>The Economist</em>, January 11, 2014.</p>
<p>&ldquo;The problem [with defined benefit pensions] begins with mismeasurement of liabilities and the cost of funding them securely, for financial reporting purposes. The proper way to value future cash flows such as pension benefit payments is with discount rates that reflect the risk of the payments. This is separate from the question of the rate pension funds will earn on their investments. [&hellip;] This bears repeating: The proper rate for valuing pension liabilities on financial statements is separate from the question of what pension funds will earn on their investments. Different rates may be appropriate for valuing liabilities than for assumed investment returns &mdash; and we recommend, later, that different rates be used. The major significance of valuing liabilities incorrectly is that it leads to inadequate funding policies, and encourages the mistaken belief that benefits can be greater, services can be greater, or taxes lower while still funding benefits securely.&rdquo;<br />&mdash;Donald J. Boyd and Peter J. Kiernan, <em>Strengthening the Security of Public Sector Defined Benefit Plans</em>, The Nelson A. Rockefeller Institute of Government, State University of New York, January 2014, pp.vii-viii.</p>
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<hr />
<p><strong>Additional Resources:</strong></p>
<ul>
<li><a href="http://reason.org/areas/topic/privatization">More privatization news</a></li>
<li><a href="http://reason.org/areas/topic/government-reform">More government reform news</a></li>
<li><a href="http://reason.org/news/show/annual-privatization-report-2013"><em>Annual Privatization Report 2013</em> homepage</a></li>
<li><a href="http://reason.org/news/show/innovators-in-action-2014"><em>Innovators in Action 2014</em> homepage</a></li>
<li><a href="http://reason.org/news/show/innovators-in-action-2013"><em>Innovators in Action 2013</em> homepage</a></li>
<li><a href="http://reason.org/newsletters/privgovreform/"><em>Privatization &amp; Government Reform Newsletter</em> archive</a></li>
</ul>
<hr />1013717@http://www.reason.orgWed, 29 Jan 2014 17:20:00 ESTleonard.gilroy@reason.org (Leonard Gilroy)Parks 2.0: Operating State Parks Through Public-Private Partnershipshttp://www.reason.org/news/show/parks-20-operating-state-parks-thro
Reason Foundation & Buckeye Institute <p>The ongoing fiscal challenges facing state governments are creating an existential crisis for state parks. With budgets stretched increasingly thin, state parks must compete for limited funds with other&mdash;often higher&mdash;policy priorities like education, health care, public pensions and public safety. These budget pressures have prompted policy makers in California, New York, Florida, Arizona, Georgia, Massachusetts and other states to close or significantly reduce services in hundreds of state parks, or at minimum reduce parks budgets, nationwide. In other states, like Washington and South Carolina, governors and legislatures have recently launched efforts to require parks to become self-sufficient to wean them off state appropriations, in seeming recognition that parks funding will increasingly be crowded out by other spending priorities.</p>
<p>Beyond the threat of closures, the ongoing economic malaise has exacerbated a widespread, pre-existing problem of inadequate and deferred maintenance in state parks, which only serves to accelerate their decline. A 2010 report by the National Park Service found that states had identified $18.5 billion in unfunded needs for parks and recreation. The National Trust for Historic Preservation noted in 2010 that over half the state parks systems are &ldquo;at-risk,&rdquo; which means that state-owned and -managed parks and historic sites are facing major budget cuts. For example, the California State Parks System accumulated over $1 billion in deferred repairs and maintenance; and that&rsquo;s not to mention the significant hurdles covering operational costs across the system.</p>
<p>Yet state parks remain popular while their maintenance needs continue to worsen; according to America&rsquo;s State Parks Foundation, state parks received 725 million visitors at over 6,000 sites around the country in 2010 alone.8 Can this popularity be turned from a cost into a benefit? One way to keep state parks open without imposing additional burdens on the taxpayer is to utilize public-private partnerships (PPPs). Many states already successfully use private concessionaires to provide piecemeal services within parks&mdash;including food, retail, lodging, marinas, and other commercial activities&mdash;so a shift to more extensive involvement can build on that. Such a whole park operation PPP would transfer the responsibility of maintaining the park to a private operator, while enabling that operator to raise revenue through entrance and other fees.</p>
<p>The U.S. Forest Service has used this PPP model for over 25 years to operate thousands of its developed recreation areas nationwide, and in 2012 California began the first state to turn over the operation of state parks to private recreation management companies to avoid closure. This paper seeks to describe such a model and explain how it can best be applied at the state level.</p>
<p><em>A version of this study was published by the Conservation Leadership Council in January 2013.</em></p>1013192@http://www.reason.orgTue, 10 Dec 2013 08:55:00 ESTleonard.gilroy@reason.org (Leonard Gilroy)Saving California State Parks through Public-Private Partnershipshttp://www.reason.org/blog/show/parks-california-privatization
<p>Last weekend, the <a href="http://reason.org/news/show/state-parks-privatization-californi"><em>Orange County Register</em> ran an op-ed of mine</a> making the case for more privatization in California State Parks. I say "more" because last year the state turned over the operation of dozens of its state parks to private, nonprofits&mdash;as well as another handful to private, for-profit recreation management companies&mdash;to avoid the closure of these parks, keeping them open for public enjoyment. Here's an excerpt of <a href="http://reason.org/news/show/state-parks-privatization-californi">my column</a>:</p>
<blockquote>A recent report from the Little Hoover Commission recommends paring back the agency and devolving some of its key functions&mdash;most notably, the operation of parks themselves&mdash;to third parties. &ldquo;The current model of a highly centralized state-run park system is obsolete,&rdquo; the Little Hoover Commission report finds.<br /><br />It calls for a new operating model that includes expanding the role of outside partners in the direct operation and management of state parks. These outside partners would include other governments, nonprofits, and for-profit companies.<br /><br />Many taxpayers may be unaware that in 2012 California successfully turned over the operation of four state parks to for-profit park management companies. The state signed a five-year lease with American Land &amp; Leisure, a Utah-based recreation company, to take over the campground and day use operations at three Central Valley recreational areas (Turlock Lake, Woodson Bridge, and Brannan Island). It also handed over operation of the Central Coast&rsquo;s Limekiln State Park to the California-based Parks Management Company.<br /><br />In doing so, the costs of operating and maintaining these parks was transferred from taxpayers to the private operator. The companies pay all operating costs. They also pay a pre-determined percentage of the revenues collected at those parks back to the state as rent, which is put into a park maintenance fund to cover upkeep costs.<br /><br />State parks have suffered from a cycle of neglect and perennial budget games in Sacramento, but they now have a path to sustainability.</blockquote>
<p>This is far from radical or unique. As <a href="http://reason.org/news/show/state-parks-privatization-californi">I noted in the article</a>:</p>
<blockquote>Private, for-profit management of public parks isn't a new idea. In fact, it&rsquo;s been happening in U.S. Forest Service (USFS) areas within California and across the country since the 1980s, when federal budget cuts threatened their closure. Private management has kept them open for decades. According to a January report released by the Conservation Leadership Council that I co-authored, recreation management companies currently operate over half of the USFS&rsquo;s thousands of developed recreation areas (e.g., campgrounds, day use areas) nationwide under lease agreements, including over 100 each in California, Colorado, Oregon, and Washington. Other western states like Arizona, New Mexico, and Nevada each have dozens of parks under private operation as well.</blockquote>
<p>For more on this topic, see:</p>
<ul>
<li>Little Hoover Commission March 2013 report, "<a href="http://www.lhc.ca.gov/studies/215/report215.html">Beyond Crisis: Recapturing Excellence in California's State Park System</a>"</li>
<li>Conservation Leadership Council &amp; Reason Foundation January 2013 study, "<a href="http://reason.org/news/show/parks-20-operating-state-parks-thro">Parks 2.0: Operating State Parks Through Public-Private Partnerships</a>"</li>
<li>Reason Foundation <em>Annual Privatization Report 2013</em> article, "<a href="http://reason.org/news/show/apr-2013-state-parks-privatization">California Pioneers Public-Private Partnerships for Private Operation of State Parks</a>"</li>
</ul>1013405@http://www.reason.orgSat, 01 Jun 2013 14:23:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Public-Private Partnerships Could Save State Parkshttp://www.reason.org/news/show/state-parks-privatization-californi
Orange County Register <p>Last year it was discovered that the California parks officials were hiding $54 million, in part because they were worried that if budget officials across this debt- and deficit-riddled state found out they hadn&rsquo;t spent the money yet, it would be taken and their budgets would be cut. So, it&rsquo;s clear the parks department could use some transparency and efficiency upgrades. The parks also have a lot of overdue maintenance: across the state, over $1 billion in needed maintenance has been deferred.</p>
<p>A recent report from the Little Hoover Commission recommends paring back the agency and devolving some of its key functions&mdash;most notably, the operation of parks themselves&mdash;to third parties. &ldquo;The current model of a highly centralized state-run park system is obsolete,&rdquo; the Little Hoover Commission report finds.</p>
<p>It calls for a new operating model that includes expanding the role of outside partners in the direct operation and management of state parks. These outside partners would include other governments, nonprofits, and for-profit companies.</p>
<p>Many taxpayers may be unaware that in 2012 California successfully turned over the operation of four state parks to for-profit park management companies. The state signed a five-year lease with American Land &amp; Leisure, a Utah-based recreation company, to take over the campground and day use operations at three Central Valley recreational areas (Turlock Lake, Woodson Bridge, and Brannan Island). It also handed over operation of the Central Coast&rsquo;s Limekiln State Park to the California-based Parks Management Company.</p>
<p>In doing so, the costs of operating and maintaining these parks was transferred from taxpayers to the private operator. The companies pay all operating costs. They also pay a pre-determined percentage of the revenues collected at those parks back to the state as rent, which is put into a park maintenance fund to cover upkeep costs.</p>
<p>State parks have suffered from a cycle of neglect and perennial budget games in Sacramento, but they now have a path to sustainability.</p>
<p>For those who may fear increased commercialization&mdash;or &ldquo;Disneyfication&rdquo;&mdash;of parks, the contracts don&rsquo;t allow that. The state continues to own the parks and set the policy direction for them. The contracts hold the private companies accountable for meeting strict performance and operating standards that protect the character and mission of the parks, as established by the state. The operator cannot so much as change the design of a bathroom without state approval.</p>
<p>Private, for-profit management of public parks isn't a new idea. In fact, it&rsquo;s been happening in U.S. Forest Service (USFS) areas within California and across the country since the 1980s, when federal budget cuts threatened their closure. Private management has kept them open for decades. According to a January report released by the Conservation Leadership Council that I co-authored, recreation management companies currently operate over half of the USFS&rsquo;s thousands of developed recreation areas (e.g., campgrounds, day use areas) nationwide under lease agreements, including over 100 each in California, Colorado, Oregon, and Washington. Other western states like Arizona, New Mexico, and Nevada each have dozens of parks under private operation as well.</p>
<p>Looking ahead, it&rsquo;s hard to see where California is going to come up with an infusion of cash to rebuild and maintain its parks. An April 2013 Government Accountability Office report warned of a dire outlook for state and local government budgets all the way through the year 2060, with rising healthcare and pension costs contributing to growing debt as far as the eye can see.</p>
<p>&ldquo;The results are clear. A great public institution is falling apart. Without a bold, new course equal to the vision that created the state park system, California risks a replay of closing parks that the state can no longer afford to operate,&rdquo; Virginia Ellis, who chaired the Little Hoover Commission&rsquo;s state parks study, said.</p>
<p>The old way of running the state parks doesn&rsquo;t work any more. California parks need better government and management. Public-private partnerships&mdash;along with other worthy Commission recommendations like modernizing the park agency&rsquo;s financial accounting systems, requiring it to prepare annual operating audits and performance reports, and giving it more hiring flexibility&mdash;can help preserve the state parks for generations to come.</p>
<p><em>Leonard Gilroy is director of government reform at Reason Foundation. This column was <a href="http://www.ocregister.com/articles/parks-509988-state-california.html">originally published</a> by the </em>Orange County Register<em> on May 25, 2013.</em></p>1013404@http://www.reason.orgFri, 31 May 2013 00:00:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)How to Avoid Closing Washington State Parkshttp://www.reason.org/blog/show/how-avoid-closing-washington-parks
<p>Many thanks to the Washington Policy Center for publishing my <a href="http://www.washingtonpolicy.org/publications/legislative/rethinking-washington-state-parks-how-avoid-governor-inslee&rsquo;s-plan-close-60">legislative memo today</a> on how to avoid the closure of dozens of Washington State parks, as Gov. Inslee has proposed if his tax increase package fails to advance. Here's an excerpt:</p>
<blockquote>The threat of closing five dozen state parks is yet another variation on the well-worn &ldquo;Washington Monument Syndrome&rdquo; tactic designed to threaten closure or disruption of popular amenities if tax increases are not approved.<br /><br />Political tactics notwithstanding, Washington&rsquo;s state parks system does indeed face significant funding challenges. General fund appropriations for parks have been on the decline for years, a predictable circumstance in a fiscal football game in which funding for major spending priorities like education, healthcare, public safety and public-sector retiree benefits increasingly crowds out funding for the &ldquo;nice-to-have&rdquo; amenities like state parks. The sooner that policymakers and citizens understand this basic trajectory is only going to intensify &mdash; and that new solutions are needed to sustain the &ldquo;nice-to-have&rdquo; items like state parks &mdash; the better.<br /><br />Some in Washington have begun to realize this when it comes to parks. In recent years, the legislature pushed the Washington State Parks Commission to pursue financial self-sustainability, and to its credit, the agency has pursued a range of strategies that include staff reductions, an increasing reliance on user fees and non-recreational leases, and expanding revenue-generating assets within the parks themselves. While these actions have not solved the funding challenge, they have been useful steps to keep the parks system afloat.<br /><br />Short-term infusions of funding along the lines proposed by the governor are not a sustainable financial strategy if the goal is to keep parks open and thriving for the long term. Washington, like many other states, is due for a major rethinking of the structure and operation of the parks system itself. [&hellip;]<br /><br />Though it may be anathema to the preconceived visions held by some parks advocates, there is indeed a strong role for private-sector and non-profit operators in the state parks. For example, nonprofits played a major role in taking over operations of dozens of California state parks to help avoid closure amid 2012&rsquo;s budget battles, and many municipal parks, zoos and aquariums, including New York City&rsquo;s famed Central Park, have long been operated by nonprofit conservancies and &ldquo;friends&rdquo; groups.</blockquote>
<p>Read the whole thing <a href="http://www.washingtonpolicy.org/publications/legislative/rethinking-washington-state-parks-how-avoid-governor-inslee&rsquo;s-plan-close-60">here</a> or <a href="http://reason.org/news/show/wa-state-parks-inslee">here</a> for more on the role of the for-profit sector in operating Evergreen State parks.</p>1013387@http://www.reason.orgFri, 17 May 2013 13:57:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Rethinking Washington State Parks: How to Avoid Governor Insleeâ??s Plan to Close 60 State Parkshttp://www.reason.org/news/show/wa-state-parks-inslee
Washington Policy Center Legislative Memo <p>In his &ldquo;Working Washington&rdquo; report issued earlier this year, Gov. Jay Inslee proposes a range of new taxes to help increase funding for education and other state services, including Washington&rsquo;s cash-strapped state parks system.<sup><a href="#ref1">1</a><a name="cite1"></a></sup> Without an additional $23.7 million in new funding, the governor warns that &ldquo;up to 60 state parks could be closed year round or seasonally.&rdquo;</p>
<p>The threat of closing five dozen state parks is yet another variation on the well-worn &ldquo;Washington Monument Syndrome&rdquo; tactic designed to threaten closure or disruption of popular amenities if tax increases are not approved.</p>
<p>Political tactics notwithstanding, Washington&rsquo;s state parks system does indeed face significant funding challenges. General fund appropriations for parks have been on the decline for years, a predictable circumstance in a fiscal football game in which funding for major spending priorities like education, healthcare, public safety and public-sector retiree benefits increasingly crowds out funding for the &ldquo;nice-to-have&rdquo; amenities like state parks. The sooner that policymakers and citizens understand this basic trajectory is only going to intensify &mdash; and that new solutions are needed to sustain the &ldquo;nice-to-have&rdquo; items like state parks &mdash; the better.</p>
<p>Some in Washington have begun to realize this when it comes to parks. In recent years, the legislature pushed the Washington State Parks Commission to pursue financial self-sustainability, and to its credit, the agency has pursued a range of strategies that include staff reductions, an increasing reliance on user fees and non-recreational leases, and expanding revenue-generating assets within the parks themselves. While these actions have not solved the funding challenge, they have been useful steps to keep the parks system afloat.</p>
<p>Short-term infusions of funding along the lines proposed by the governor are not a sustainable financial strategy if the goal is to keep parks open and thriving for the long term. Washington, like many other states, is due for a major rethinking of the structure and operation of the parks system itself.</p>
<p>California faced a similar parks funding crisis. A report issued in March by the Little Hoover Commission (LHC) &mdash; a highly respected, independent and bipartisan state oversight agency in place for over 50 years &mdash; makes a compelling argument for top-to-bottom rethinking of how that state&rsquo;s park system operates, and could offer insights for parks officials in Washington state.<sup><a href="#ref2">2</a><a name="cite2"></a></sup></p>
<p>In its report prepared for California Gov. Jerry Brown and the state legislature, LHC argues that &ldquo;the current model of a highly centralized state-run park system is obsolete&rdquo; and that California State Parks needs a new operating model. The report offers many recommendations on ways to reinvent state park management for the 21st century. One of the most important recommendations is to significantly expand the role of outside partners, including other governments, nonprofits, and for-profit recreation management companies, in the direct operation and management of state parks. Some brief quotes from the report highlight this point:</p>
<ul>
<li>&ldquo;Individuals, non-profits, foundations and companies scrambled to find fixes to keep the 70 [California] parks open [that had been threatened with closure in 2012], if only temporarily. The outpouring of generosity, resourcefulness and ingenuity demonstrated that California&rsquo;s parks have immense support, from individuals as well as national and regional park systems.... The agreements developed to allow outsiders to run or help run state parks also demonstrated that there is a range of operating alternatives as well.... Shared management initiatives with these partners are essential to the system&rsquo;s future.&rdquo; </li>
<li>&ldquo;The Governor and the Legislature should give the department the authority to try more alternative management approaches throughout the system, to tap the expertise of these partners and to share the risk that comes with innovation.&rdquo; </li>
<li>&ldquo;In the new model, the department&rsquo;s partners will come in many forms, as will partnership agreements. Some are volunteer associations whose focus is a single park. Others are small concessionaires that specialize in one area, whether maintenance or raft trips. Others are foundations with substantial resources and corporations with experience in running large operations in different states.&rdquo;</li>
<li>&ldquo;Based on its experience with joint operating agreements with the National Park Service and regional park services, the department, on a pilot basis, should solicit proposals for cooperative operating arrangements that bundle geographically proximate parks owned by different government entities for greater operating efficiencies. Consortiums making proposals may include as members state, national and regional park agencies, conservancies, trusts, volunteer associations and private concession companies. Consortiums may propose their own operating and staffing models, as long as they are consistent with the goals of natural and cultural resource preservation, public access and education.&rdquo;<sup><a href="#ref3">3</a><a name="cite3"></a></sup></li>
</ul>
<p>In other words, the century-old, top-down model of state parks operated and managed by state parks agencies is not sustainable and needs to be replaced by an approach in which the parks agency sets the mission for the parks system and then serves as a coordinator to arrange the right blend of public and private sector operators on a park-by-park basis.</p>
<p>Though it may be anathema to the preconceived visions held by some parks advocates, there is indeed a strong role for private-sector and non-profit operators in the state parks. For example, nonprofits played a major role in taking over operations of dozens of California state parks to help avoid closure amid 2012&rsquo;s budget battles, and many municipal parks, zoos and aquariums, including New York City&rsquo;s famed Central Park, have long been operated by nonprofit conservancies and &ldquo;friends&rdquo; groups.</p>
<p>The for-profit parks operation is even more interesting and presents a significant opportunity for Washington state, as I detailed in a blog post at washingtonpolicy.org last August.<sup><a href="#ref4">4</a><a name="cite4"></a></sup> Most notably:</p>
<blockquote>While this may sound like a fantasy, it&rsquo;s already happening all around Washington state. Private, for-profit recreation management companies currently operate over half of the U.S. Forest Service&rsquo;s (USFS) thousands of developed recreation areas (e.g., campgrounds, day use areas) nationwide under &ldquo;whole-park&rdquo; concession agreements. Washington, California, Colorado and Oregon each already have over 100 USFS parks and campgrounds currently operated by private concessionaires, with hundreds more spread out across other Western states. This USFS program has been in place for over 25 years, prompted originally by fiscal pressures on the agency decades ago that led it to embrace user fees and &ldquo;whole park&rdquo; concessions to keep its numerous recreation areas open and self-sustaining. Sound familiar?</blockquote>
<p>For a detailed analysis of the opportunity in the for-profit operation of state parks, as well as a debunking of common myths and misunderstandings surrounding it, readers should review the January 2013 policy study I co-authored on the subject on behalf of the Conservation Leadership Council.<sup><a href="#ref5">5</a><a name="cite5"></a></sup></p>
<p>In what should serve as a model for Washington, in 2012 California became the first state to turn over the operation of multiple state parks to private recreation management companies to rescue them from closure. The LHC report describes the initiative:</p>
<blockquote>During the 2012 closure crisis, the department invited new proposals and issued five-year contracts with private companies to operate entire state parks. &hellip; Under the contracts, American Land &amp; Leisure of Orem, Utah, has begun operating three state recreation areas for the department: 336-acre Brannan Island in Sacramento County, 228-acre Turlock Lake with 26 miles of Stanislaus County shoreline, and 428-acre Woodson Bridge in Tehama County. American Land &amp; Leisure operates 400 public and private campgrounds throughout the United States for the U.S. Forest Service, and others&hellip;.<br /><br />The department similarly issued a five-year contract to Templeton-based Parks Management Company to operate the 716-acre Limekiln State Park on the Big Sur coastline of Monterey County. Parks Management Company operates campgrounds, day use areas, marinas and RV resorts throughout California. Under the agreements, both companies provide minimum walk-around park security with options to call in the county sheriff&rsquo;s department for assistance. Both also pay a percentage of their park revenues to the department, which uses the proceeds for maintenance and repairs of those individual parks&hellip;.<br /><br />Many of these agencies concluded years ago that contracting out appropriate parks to private operators is less expensive than having government provide the service. Concessionaires provide lower-cost operations models through more extensive use of seasonal staff, though the state has long relied on seasonal workers. The private firms generate revenues from gate fees and use them to make improvements that bring more visitors to parks.<br /><br />Longer-term concession contracts provide longer income streams and, with them, opportunities to improve park infrastructure, expand lodging alternatives and address deferred maintenance. At Siskiyou County&rsquo;s McArthur-Burney Falls Memorial State Park, for example, Arizona-based Recreation Resource Management spent nearly $2 million to install 24 cabins in 2007 under a 20-year contract with California state parks. The long contract enables RRM to recoup its investment costs and returns the cabins &ndash; maintained according to a performance contract &ndash; to state ownership at the end. These kinds of private contracts increasingly represent a management option not only for the department, but for the non-profits and cooperating associations that have rescued and begun operating state parks proposed for closure in 2012.</blockquote>
<p>Public-private partnerships like these are going to be key to the future in Washington state. The problem is not that there&rsquo;s not enough general tax money being spent on parks, as Gov. Inslee seems to imply in his proposal; the problem is a reliance on an antiquated, bureaucracy-centered governance and management structure, and this is a problem that one-shot infusions of tax dollars will never be able to solve.</p>
<p>To keep state parks open and financially sustainable for the long term, Washington policymakers need to reinvent their system to accommodate parks operation that puts the right operators in the right place at the right time, regardless of whether or not they are state employees.</p>
<p><em>Leonard Gilroy is director of government reform at Reason Foundation based in Los Angeles, and an adjunct scholar with Washington Policy Center based in Seattle. This article was <a href="http://www.washingtonpolicy.org/publications/legislative/rethinking-washington-state-parks-how-avoid-governor-inslee&rsquo;s-plan-close-60#_ftn4">originally published</a> as a legislative memo by the Washington Policy Center on May 17, 2013.</em></p>
<hr />
<p><strong>Endnotes</strong></p>
<p><a name="ref1"></a><sup><a href="#cite1">1</a></sup> &ldquo;Working Washington&rdquo; 2013&ndash;15 budget priorities, Office of Governor Jay Inslee, March 28, 2013, at <a href="http://www.ofm.wa.gov/budget13inslee/presspacket.pdf">www.ofm.wa.gov/budget13inslee/presspacket.pdf</a>.</p>
<p><a name="ref2"></a><sup><a href="#cite2">2</a></sup> &ldquo;Beyond Crisis: Recapturing Excellence in California&rsquo;s State Park System,&rdquo; Little Hoover Commission, March 2013, at <a href="http://www.lhc.ca.gov/studies/215/report215.html">www.lhc.ca.gov/studies/215/report215.html</a>.</p>
<p><a name="ref3"></a><sup><a href="#cite3">3</a></sup> Ibid.</p>
<p><a name="ref4"></a><sup><a href="#cite4">4</a></sup> &ldquo;Private Operation Could Help Keep Washington&rsquo;s State Parks Moving toward Self-sufficiency,&rdquo; by Leonary Gilroy, August 24, 2012, at <a href="http://www.washingtonpolicy.org/blog/post/private-operation-could-help-keep-washington%E2%80%99s-state-parks-moving-toward-self-sufficiency">www.washingtonpolicy.org/blog/post/private-operation-could-help-keep-washington%E2%80%99s-state-parks-moving-toward-self-sufficiency</a>.</p>
<p><a name="ref5"></a><sup><a href="#cite5">5</a></sup> &ldquo;Parks 2.0: Operating State Parks Through Public-Private Partnerships,&rdquo; by Leonary Gilroy, Harris Kenny and Julian Morris, Reason Foundation; January 2013, at <a href="/www.leadingwithconservation.org/wp-content/uploads/2013/01/CLC_III-Gilroy_Kenny_Morris_1.3.13.pdf">www.leadingwithconservation.org/wp-content/uploads/2013/01/CLC_III-Gilroy_Kenny_Morris_1.3.13.pdf</a>.</p>1013386@http://www.reason.orgFri, 17 May 2013 13:39:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)New at Reason: Looking Back at the Last Year in Local Government Privatizationhttp://www.reason.org/blog/show/apr-2013-privatization-local
<p>The rollout of Reason Foundation's <a href="http://reason.org/news/show/annual-privatization-report-2013"><em>Annual Privatization Report 2013</em></a> continues today with the release of the <a href="http://reason.org/news/show/apr-2013-local-privatization">Local Government Privatization</a> section&mdash;authored by Reason's Harris Kenny, Adam Summers and Steven Titch&mdash;which provides an overview of the latest on privatization and public-private partnerships in local government. Articles include:</p>
<ul>
<li>Mayor Emanuel Establishes Chicago Infrastructure Trust</li>
<li>Public-Private Partnerships for Parking Assets</li>
<li>Yonkers, New York Pursuing Innovative School Partnership Approach</li>
<li>City of Austin Releases Surprising Outsourcing Study</li>
<li>Georgia Contract Cities Continue to Evolve</li>
<li>Finding New Ways to Provide Parks and Recreation Amenities</li>
<li>Water and Wastewater Privatization Update</li>
<li>Solid Waste Collection Update</li>
<li>Non-Profit Partnerships for Animal Shelters Grow</li>
<li>ANALYSIS: Is Managed Competition Dead in San Diego?</li>
<li>ANALYSIS: San Diego, San Jose Lead the Way in Local Pension Reform</li>
<li>ANALYSIS: Despite Glossy Reports, Muni Broadband is Still a Net Money Loser</li>
<li>Local Government Privatization News and Notes</li>
</ul>
<p><strong>&raquo;</strong> <a href="http://reason.org/news/show/apr-2013-local-privatization"><em>Annual Privatization Report 2013</em>: Local Government Privatization</a><br /><strong>&raquo;</strong> <a href="http://reason.org/news/show/annual-privatization-report-2013">Complete <em>Annual Privatization Report 2013</em></a></p>1013372@http://www.reason.orgMon, 06 May 2013 16:25:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Finding New Ways to Provide Parks and Recreation Amenitieshttp://www.reason.org/news/show/apr-2013-parks-and-recreation
Annual Privatization Report 2013 <p style="font-size: 85%;"><strong>&raquo;</strong> <a href="http://reason.org/news/show/apr-2013-local-privatization">Return to <em>Annual Privatization Report 2013: Local Government Privatization</em></a><br /><strong>&raquo;</strong> <a href="http://reason.org/news/show/annual-privatization-report-2013">Return to&nbsp;<em>Annual Privatization Report 2013</em> homepage</a></p>
<p><strong>Finding New Ways to Provide Parks and Recreation Amenities</strong></p>
<p>Increasingly, communities are looking to public-private partnerships that go beyond traditional outsourcing to improve the operation and maintenance of amenities like zoos, theaters and farmers markets. The following series of 2012 case studies highlights discussion of this policy tool at the state and local level across the United States.</p>
<p><strong>North Carolina Zoo:</strong> North Carolina lawmakers considered a bill (HB 12-958) that would turn operations of the 2,000-acre, state-owned North Carolina Zoo over to the private sector. Lawmakers are considering a partnership because the zoo has approximately $30 million in deferred maintenance, and has consistently been underfunded over the past 15&ndash;20 years.<sup><a href="#refH1">1</a><a name="citeH1"></a></sup> The bill would have also reduced public operating subsidies, allowed the zoo to generate more revenue, encouraged increased private donations and provided funding for the transition.</p>
<p>Specifically, HB 12-958 sought to transfer operations and maintenance duties to the North Carolina Zoological Society for 25 years in exchange for the following support:</p>
<ul>
<li>$10 million annual operating subsidy;</li>
<li>$30 million in deferred maintenance, through six $5 million payments; and</li>
<li>$3.2 million in transition costs.<sup><a href="#refH2">2</a><a name="citeH2"></a></sup></li>
</ul>
<p>The bill ultimately failed last session, but it will be discussed again in 2013 according to Representative Tom Moffitt, an Asheville Republican. Terms similar to HB 12-958 will likely be included in the 2013 reincarnation of this bill.<sup><a href="#refH3">3</a><a name="citeH3"></a></sup></p>
<p><strong>Los Angeles Zoo:</strong> After years of discussion, and outright support from Los Angeles Mayor Antonio Villaraigosa&rsquo;s administration, the city abandoned plans to implement a public-private partnership for the Los Angeles Zoo. Talks broke down in September amidst questions about how much autonomy the city would grant the Greater Los Angeles Zoo Association (GLAZA). <em>The Los Angeles Business Journal</em> reports that GLAZA wrote a letter to City Administrative Officer Miguel Santana explaining, &ldquo;existing city policies and regulations made it too difficult for a private operator to function.&rdquo;<sup><a href="#refH4">4</a><a name="citeH4"></a></sup></p>
<p>It is unclear what the city will do with the zoo in the face of ongoing fiscal woes. Last year the 1,100-acre zoo cost Angelenos $17.5 million. City officials estimate a $216 million deficit this year, following four years of deficits adding up to over $1 billion. Meanwhile the zoo has raised ticket prices five times over the last five years.<sup><a href="#refH5">5</a><a name="citeH5"></a></sup></p>
<p><strong>Dallas Farmers Market:</strong> City officials spent much of 2012 mulling over what to do with the Dallas Farmers Market, and while there have been no substantive decisions made as of press time, a likely deal is emerging. The Farmers Market Group (consisting, among many others, of a real estate developer, architectural firm and restaurateur) won a request for proposals (RFP) seeking ideas for the facility. Details of their proposal have not been publicly released because of uncertainty over how it might impact existing tenants, according to <em>The Dallas Morning News</em>:</p>
<blockquote>All we know for now is that it will involve a $58 million mixed-use development with restaurants, retail, apartments and a parking garage&mdash;for starters. What we don&rsquo;t know is how many of the sheds will remain standing once the deal&rsquo;s done, who will be responsible for what and which of the tenants will remain. Well, that&rsquo;s not entirely true: It&rsquo;s safe to say Pecan Lodge will stay; so too Shed 2, given the city&rsquo;s $3.2 million investment in the air-conditioned food court. Everything else is a bit up in the air.<sup><a href="#refH6">6</a><a name="citeH6"></a></sup></blockquote>
<p>Questions about financial feasibility loom large, like clarity on support from tax increment financing and addressing lingering debt from a 2006 bond issue. Various land use processes like surveys, appraisals, deeds, zoning and construction are also in question.</p>
<p><strong>Elks Opera House (Prescott, Arizona):</strong> In May 2012 city officials gave City Manager Craig McConnel approval to issue a request for proposals (RFP) for the city&rsquo;s historic downtown theater, the Elks Opera House, built in 1905. "We've been aware of a long-standing interest in getting out of the theater business," McConnell told the city council. Prescott Budget and Finance Director Mark Woodfill said the city spends $258,000 annually on theater operations, while collecting $105,000 in revenues; meaning the theater costs taxpayers $153,000 each year.<sup><a href="#refH7">7</a><a name="citeH7"></a></sup> City records show the theater cost taxpayers at least $100,000 each year since 2009.<sup><a href="#refH8">8</a><a name="citeH8"></a></sup> Among other things, the RFP required bidders to:</p>
<ul>
<li>Preserve the theater as a community venue for performing arts and related purposes;</li>
<li>Maintain the historic quality and integrity of the theater;</li>
<li>Reinforce and promote mutually beneficial relationships among the theater, downtown businesses, and local government, by serving as an economic generator; and,</li>
<li>Achieve, maintain, restore and preserve the highest quality of historic architectural and interior design.</li>
</ul>
<p>The Elks Theater Performing Arts Center Group, a local nonprofit organization, offered the city $500,000 to purchase the theater, which the city ultimately rejected. Even though the RFP did not include a minimum price, Prescott officials were seeking at least $1.39 million&mdash;approximately half the contested appraised value of the theater. Critics who contest the appraisal argue restrictions that come with building operations should lower the price, citing limited ability to generate revenue and persistent operational budget deficits.</p>
<p>City officials explained that $3.5 million has been invested in the theater over the last decade. However, these are sunk costs and only $1.38 million of that money actually came from the city; $420,000 came from public grants and $1.75 million came from philanthropic contributions to the Elks Opera House Foundation. The offer reportedly also included a &ldquo;sizeable endowment&rdquo; from a primary donor who has successfully completed two comparable projects elsewhere in the United States.<sup><a href="#refH9">9</a><a name="citeH9"></a></sup></p>
<p>In September the Elks Theater Performing Arts Center Group was able to purchase the top floor of the theater from a law firm that occupied the space; the Group now owns the upper portion of the building and much of the exterior fa&ccedil;ade. The group remains interested in purchasing the whole building eventually, but it will make use of the space it now owns for smaller performances, educational programming, instructional sessions, rehearsals and more in the meantime.<sup><a href="#refH10">10</a><a name="citeH10"></a></sup> The city of Prescott also owns a golf course and restaurant that officials have discussed divesting, but as of press time there are no substantive efforts underway.</p>
<p><strong>Baltimore, Maryland:</strong> In 2011 Baltimore Mayor Stephanie Rawlings-Blake announced an ambitious plan to revamp the city&rsquo;s recreational centers through public-private partnerships. In May 2012, the city signed an agreement with Parks Heights Renaissance to transfer operations of the Towanda Rec Center. The agreement provides the organization with a $100,000 seed grant from the city that will allow youth athletic, summer recreation and senior programs to continue at the facility. Four other facilities have been turned over to the private sector under Rawlings-Blake&rsquo;s plan. Three of them received $50,000 in seed money from the city.<sup><a href="#refH11">11</a><a name="citeH11"></a></sup></p>
<p><strong>Milpitas, California:</strong> In June 2012 the Milpitas City Council announced its first-ever public works public-private partnership. The move seeks to right size the department in light of deteriorating park conditions ranging from broken irrigation systems and dead shrubbery to graffiti and vandalism. The city awarded contracts to Colorado-based Terracare Associates for park and street landscaping and repair services.</p>
<p>According to a June article in the Milpitas Post, the one-year contract for parks maintenance has four one-year options for renewal that could add up to almost $7 million if every option is exercised. Terracare will maintain 24 city parks and sports fields, providing routine landscape maintenance (i.e. pruning, weed removal, turn care, plant replacements, irrigation system maintenance and fixture and equipment repair services). The streetscape maintenance and repair contract has a $125,218 annual cap for all aspects of landscape and irrigation system maintenance for the city&rsquo;s landscapes, streetscapes, medians and rights of way.</p>
<p><strong>Indian River County, Florida:</strong> The Indian River County Commissioners voted unanimously to contract with two firms to maintain county-owned beach parks, in a deal expected to save taxpayers $164,000 annually, effective February 2012. The first contract, for $56,642 with Clearwater-based Boro Building and Property Maintenance Inc., is for janitorial services. The second contract, for $15,120 with Okeechobee-based Integrity Lawn and Landscaping, is for outside maintenance. The deals eliminated two vacant positions and affected one maintenance worker and one foreman. Personnel decisions will be based on seniority according to the contract with Teamsters Local 769. The private contractors agreed to consider hiring the two displaced employees if they have openings for comparable positions.<sup><a href="#refH12">12</a><a name="citeH12"></a></sup></p>
<p style="font-size: 85%;"><strong>&raquo;</strong> <a href="http://reason.org/news/show/apr-2013-local-privatization">Return to <em>Annual Privatization Report 2013: Local Government Privatization</em></a><br /><strong>&raquo;</strong> <a href="http://reason.org/news/show/annual-privatization-report-2013">Return to&nbsp;<em>Annual Privatization Report 2013</em> homepage</a></p>
<hr />
<p><strong>Endnotes</strong></p>
<p><a name="refH1"></a><sup><a href="#citeH1">1</a></sup> Rosella Age, &ldquo;Effort to partially privatize N.C. Zoo likely dead for the session,&rdquo; <em>The News &amp; Observer</em>, June 25, 2012. <a href="http://projects.newsobserver.com/under_the_dome/effort_to_partially_privatize_nc_zoo_likely_dead_for_the_session">http://projects.newsobserver.com/under_the_dome/effort_to_partially_privatize_nc_zoo_likely_dead_for_the_session</a></p>
<p><a name="refH2"></a><sup><a href="#citeH2">2</a></sup> Harris Kenny, Privately Operated Zoos Now Considered the Standard,&rdquo; <em>Annual Privatization Report 2011</em>, (Los Angeles, CA: Reason Foundation), May 29, 2012. <a href="http://projects.newsobserver.com/under_the_dome/effort_to_partially_privatize_nc_zoo_likely_dead_for_the_session">http://reason.org/news/show/1012913.html</a></p>
<p><a name="refH3"></a><sup><a href="#citeH3">3</a></sup> Age, &ldquo;Effort to partially privatize N.C. Zoo likely dead for the session.&rdquo;</p>
<p><a name="refH4"></a><sup><a href="#citeH4">4</a></sup> Howard Fine, &ldquo;Plan to Privatize L.A. Zoo Stopped,&rdquo; <em>Los Angeles Business Journal</em>, September 27, 2012. <a href="http://labusinessjournal.com/news/2012/sep/27/plan-privatize-l-zoo-stopped/">http://labusinessjournal.com/news/2012/sep/27/plan-privatize-l-zoo-stopped/</a></p>
<p><a name="refH5"></a><sup><a href="#citeH5">5</a></sup> Rick Orlov, &ldquo;New talks sought on Los Angeles Zoo privatization plan,&rdquo; <em>Los Angeles Daily News</em>, October, 25, 2012. <a href="http://www.dailynews.com/ci_21856544/new-talks-sought-los-angeles-zoo-privatization-plan">http://www.dailynews.com/ci_21856544/new-talks-sought-los-angeles-zoo-privatization-plan</a></p>
<p><a name="refH6"></a><sup><a href="#citeH6">6</a></sup> Robert Wilonsky, &ldquo;Unpacking the many reasons it&rsquo;s taking the city so long to finalize deal to privatize downtown Dallas Farmers Market,&rdquo; <em>The Dallas Morning News</em>, November 9, 2012. <a href="http://thescoopblog.dallasnews.com/2012/11/unpacking-the-many-reasons-its-taking-the-city-so-long-to-finalize-deal-to-privatize-downtown-dallas-farmers-market.html/">http://thescoopblog.dallasnews.com/2012/11/unpacking-the-many-reasons-its-taking-the-city-so-long-to-finalize-deal-to-privatize-downtown-dallas-farmers-market.html/</a></p>
<p><a name="refH7"></a><sup><a href="#citeH7">7</a></sup> Cindy Barks, &ldquo;City looks to private sector for operation of Elks Opera House,&rdquo; <em>The Prescott Daily Courier</em>, May 17, 2012. <a href="http://www.dcourier.com/main.asp?SectionID=1&amp;SubSectionID=1&amp;ArticleID=106676">http://www.dcourier.com/main.asp?SectionID=1&amp;SubSectionID=1&amp;ArticleID=106676</a></p>
<p><a name="refH8"></a><sup><a href="#citeH8">8</a></sup> Cindy Barks, &ldquo;Local group makes offer for Elks Opera House,&rdquo; <em>The Prescott Daily Courier</em>, July 16, 2012. <a href="http://prescottdailycourier.com/main.asp?SectionID=1&amp;subsectionID=1086&amp;articleID=108754">http://prescottdailycourier.com/main.asp?SectionID=1&amp;subsectionID=1086&amp;articleID=108754</a></p>
<p><a name="refH9"></a><sup><a href="#citeH9">9</a></sup> Cindy Barks, &ldquo;Elks Opera House sale negotiations end,&rdquo; <em>The Prescott Daily Courier</em>, August 2, 2012. <a href="http://prescottdailycourier.com/main.asp?SectionID=1&amp;subsectionID=1086&amp;articleID=109345">http://prescottdailycourier.com/main.asp?SectionID=1&amp;subsectionID=1086&amp;articleID=109345</a></p>
<p><a name="refH10"></a><sup><a href="#citeH10">10</a></sup> Cindy Barks, &ldquo;Nonprofit buys top floor of Opera House: Performing arts group wants to purchase entire Elks building,&rdquo; <em>The Prescott Daily Courier</em>, September 27, 2012. <a href="http://prescottdailycourier.com/main.asp?SectionID=1&amp;subsectionID=1086&amp;articleID=111250">http://prescottdailycourier.com/main.asp?SectionID=1&amp;subsectionID=1086&amp;articleID=111250</a></p>
<p><a name="refH11"></a><sup><a href="#citeH11">11</a></sup> Mark Reutter, &ldquo;Towanda Rec Center turned over to private operator,&rdquo; Baltimore Brew, May 9, 2012. <a href="http://www.baltimorebrew.com/2012/05/09/towanda-rec-center-turned-over-to-private-operator/">http://www.baltimorebrew.com/2012/05/09/towanda-rec-center-turned-over-to-private-operator/</a></p>
<p><a name="refH12"></a><sup><a href="#citeH12">12</a></sup> Henry A. Stephens, &ldquo;Indian River contracts out services, eliminates four parks maintenance positions,&rdquo; <em>TC Palm</em>, January 10, 2012. <a href="http://www.tcpalm.com/news/2012/jan/10/indian-river-to-contract-out-services-layoff/?partner=RSS">http://www.tcpalm.com/news/2012/jan/10/indian-river-to-contract-out-services-layoff/?partner=RSS</a></p>1013362@http://www.reason.orgMon, 06 May 2013 00:00:00 EDTinfo@reason.org (Harris Kenny)New at Reason: Looking Back at the Last Year in State Government Privatizationhttp://www.reason.org/blog/show/apr-2013-state
<p>The rollout of Reason Foundation's <a href="http://reason.org/news/show/annual-privatization-report-2013"><em>Annual Privatization Report 2013</em></a> continues today with the release of the <a href="http://reason.org/news/show/apr-2013-state-privatization">State Government Privatization</a> section&mdash;authored by Reason's Leonard Gilroy and Lisa Snell&mdash;which offers an overview of the latest on privatization and public-private partnerships in state government. Topics include:</p>
<ul>
<li>State Budget Update</li>
<li>Privatization of State Lottery Management</li>
<li>The Emergence of Social Impact Bonds: Paying for Success in Social Service Innovation</li>
<li>California Pioneers Public-Private Partnerships for Private Operation of State Parks</li>
<li>Higher Education Public-Private Partnerships Update</li>
<li>State Liquor Privatization Update</li>
<li>Social Infrastructure Public-Private Partnerships Update</li>
<li>Child Welfare Privatization Update</li>
<li>State Privatization News and Notes</li>
</ul>
<p><strong>&raquo;</strong> <a href="http://reason.org/news/show/apr-2013-state-privatization"><em>Annual Privatization Report 2013</em>: State Government Privatization</a><br /><strong>&raquo;</strong> <a href="http://reason.org/news/show/annual-privatization-report-2013">Complete <em>Annual Privatization Report 2013</em></a></p>1013337@http://www.reason.orgMon, 22 Apr 2013 13:43:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)California Pioneers Public-Private Partnerships for Private Operation of State Parkshttp://www.reason.org/news/show/apr-2013-state-parks-privatization
Annual Privatization Report 2013 <p style="font-size: 85%;"><strong>&raquo;</strong> <a href="http://reason.org/news/show/apr-2013-state-privatization">Return to <em>Annual Privatization Report 2013: State Government Privatization</em></a><br /><strong>&raquo;</strong> <a href="http://reason.org/news/show/annual-privatization-report-2013">Return to&nbsp;<em>Annual Privatization Report 2013</em> homepage</a></p>
<p>As reported in recent editions of Reason Foundation's <em>Annual Privatization Report</em>, policymakers in several states have begun to explore the expanded use of privatization and public-private partnerships (PPPs) in the operation of state parks as a means to keep parks open and thriving amid strained budgets and heightened competition for limited state funds. Though used at the federal level for decades, California broke new ground at the state level in 2012 by becoming the first state to contract with private recreation management companies to operate whole state parks.</p>
<p>For over 25 years, the U.S. Forest Service (USFS) has used an innovative PPP approach&mdash;a "park operation PPP" or "whole park concession" agreement&mdash;in which it enters into leases (concessions) authorizing the operation of one or more recreation areas by a private recreation management company (concessionaire) under a performance-based contract. Under a park operations PPP, a concessionaire takes most or all of a park's operations and maintenance costs off the public agency's books and pays the public agency an annual lease payment based on a percentage of the entry, camping and other user fees collected at the park (typically 5&ndash;15 percent of gross revenues). The agency retains full ownership of the land, and the concession subjects the company to strict state controls on operations, visitor fees, maintenance and other key issues.</p>
<p>Private, for-profit recreation management companies currently operate over half of the USFS's thousands of developed recreation areas (e.g. campgrounds, day use areas) nationwide under such "whole-park" concession agreements. For example, Colorado, California, Oregon and Washington each have over 100 USFS recreation areas and campgrounds operated by private concessionaires, with most other western states like Arizona, New Mexico and Nevada each having dozens under private operation as well. This USFS program was originally prompted by fiscal pressures on the agency in the 1980s during the Reagan administration, which led it to embrace user fees and PPPs to keep its numerous recreation areas open and self-sustaining. Other public agencies such as the Tennessee Valley Authority and the Lower Colorado River Authority have made extensive use of concessionaires to operate and maintain complete parks and campgrounds under park operations PPPs, though until 2012 this partnership model had seen limited use at the state level.</p>
<p>That changed in early 2012 when California State Parks (CSP)&mdash;which was seeking to avoid the closure of up to 70 state parks under severe funding pressures&mdash;issued a request for proposals (RFP) seeking a five-year concession contract (or contracts) to operate campground and day use state recreational areas (SRAs) at five park units in the Central Valley:</p>
<ul>
<li>Turlock Lake SRA;</li>
<li>Woodson Bridge SRA;</li>
<li>Brannan Island SRA;</li>
<li>McConnell SRA; and</li>
<li>George J. Hatfield SRA.</li>
</ul>
<p>Two of these&mdash;the McConnell and Hatfield SRAs&mdash;were subsequently removed from the procurement after the state struck agreements with outside donors to keep them open. For the remaining three parks, CSP set a minimum annual rent level for each park that bidders had to exceed in their proposals&mdash;based either on percentage of gross revenue returned to the state or specific minimum rent payment amounts set by the state, whichever was greater&mdash;and it allowed would-be concessionaires to bid for any combination of one or more parks. The parks in question represented a mix of revenue-generating and revenue-losing parks, allowing a win-win for bidders and for the state by bundling each of the parks into one PPP vehicle. The Brannan Island SRA alone had cost the state $740,000 to operate in 2011, over twice the amount it raised through user fees and traditional concession revenue, according to <em>The Wall Street Journal</em>.<sup><a href="#refD1">1</a><a name="citeD1"></a></sup></p>
<p>According to the agency&rsquo;s request for proposals, the objectives of the PPP were to:</p>
<ol type="1">
<li>Maintain campground, day use and recreational facilities and signage; </li>
<li>Ensure adequate staffing to maximize use and protection of facilities, including roads and trails; </li>
<li>Collect campground and day use entrance fees; </li>
<li>Ensure the safety and convenience of park visitors; and </li>
<li>Protect the state&rsquo;s natural and cultural resources. </li>
</ol>
<p>In June 2012 the department selected a winning bidder&mdash;Utah-based American Land &amp; Leisure, which operates 492 campgrounds across 12 states&mdash;for the three-park package. Some noteworthy aspects of the PPP include:</p>
<ul>
<li>The contract term lasts five years.</li>
<li>The state set forth clearly delineated maintenance requirements for both itself and the concessionaire. The concessionaire is generally responsible for handling (and covering the costs of) minor improvements and day-to-day repairs. For larger maintenance jobs, all revenues paid back to the state as concession rent in these three parks will be put into a park maintenance fund from which the concessionaire can spend with state approval. Regardless, the state has removed the maintenance costs for these parks from its books and transferred them to the concessionaire.</li>
<li>To protect itself against lower-than-expected concessionaire rent payments over the life of the concession, the state required American Land &amp; Leisure to obtain a performance bond covering 100 percent of the anticipated rent payments over the next five years. This is a risk transfer mechanism to ensure that the state receives 100 percent of the rent payments originally envisioned in the procurement, regardless of whether the anticipated revenues are actually generated by the park in practice.</li>
<li>Workers at the affected parks that chose not to stay on with American Land &amp; Leisure were not fired, but transferred to other parks in the system.</li>
<li>The concessionaire provides on-site, live-in staff to operate the parks, while either the California Highway Patrol or local sheriff&rsquo;s offices handle law enforcement responsibilities.</li>
<li>The concessionaire is required to provide commercial general liability, automobile, and worker&rsquo;s compensation insurance under the contract, at levels greater than the state had previously insured itself.</li>
<li>The concessionaire is required to maintain the premises, trails, roads, facilities, furnishings and equipment in good condition in accordance with agency standards and contract provisions. In fact, the concessionaire is required to implement an operations plan for each park unit (prepared by the concessionaire and approved by the state) that outlines how services will be provided and facilities maintained over the life of the concession.</li>
</ul>
<p>Additionally, CSP signed separate park operation PPPs with the Bodie Foundation to operate Mono Lake Tufa State Natural Resource Area and with Parks Management Company to operate Limekiln State Park on the central coast, bringing the total number of California state parks operated under park operation PPPs to five. CSP also negotiated partnership agreements with a variety of cities, counties and non-profit organizations to keep dozens of other parks from threatened closure as well.</p>
<p>Beyond California's groundbreaking contracts, other noteworthy developments on PPPs in parks and recreation in 2012 include:</p>
<ul>
<li><strong>Florida</strong>: In May, Florida Governor Rick Scott signed into law a bill that would authorize private for-profit and nonprofit corporate sponsorship activities in Florida state parks. Senate Bill 268 authorizes the state&rsquo;s Department of Environmental Protection to enter into sponsorship agreements allowing private firms to sponsor signs with commercial displays on state-owned greenway and trail facilities, subject to prior agency approval. A total of 85 percent of the proceeds from the program are dedicated to the operation of state trails and greenways, with the remaining 15 percent allocated to the state transportation trust fund for use in the Florida Traffic and Bicycle Safety Education program and the Florida Safe Routes to School program.</li>
<li><strong>Georgia</strong>: In September 2012, the Georgia Department of Natural Resources announced plans to turn over operation of the lodges and cottages at two state parks (Unicoi and Amicalola Falls) to Coral Hospitality, a Florida-based hotel management company, before the end of the year. The agency initially planned to close the Unicoi State Park lodge for renovations until discovering that the project costs exceeded available funding. Instead, Coral will upgrade guest rooms at the facilities while keeping the lodges open, with additional renovations of the conference facilities, restaurants and cottages scheduled over the next two years. Other park campgrounds and recreational amenities will continue to be operated by the state. Coral has also operated the state-owned Brasstown Valley Resort &amp; Spa and the Lake Blackshear Retreat and Golf Club at Georgia Veterans State Park since 2005.</li>
<li><strong>Illinois</strong>: In May 2012, the Illinois Senate unanimously passed legislation (House Bill 3611) that would transfer ownership of Wildlife Prairie State Park near Peoria from the state to the nonprofit Friends of Wildlife Prairie Park, which currently operates the park. The move comes as the state deals with ongoing fiscal pressures that have significantly reduced state parks funding in recent years. The privatization will make it easier for the nonprofit operator to attract private donations and secure financing for capital projects. At press time, the Illinois House had not taken a final vote on the legislation.</li>
<li><strong>Indiana</strong>: During the 2012 election campaign, incoming Indiana Governor Mike Pence expressed support for tapping PPPs to develop new lodging and recreational amenities in state parks, according to the <em>Fort Wayne Journal-Sentinel</em>.<sup><a href="#refD2">2</a><a name="citeD2"></a></sup> Pence&rsquo;s campaign stopped short of calling for PPPs to take over existing park operations, instead focusing on PPPs to develop new park amenities.</li>
<li><strong>Maine</strong>: In April 2012, Maine Governor Paul LePage approved the privatization of the operations of the state-owned Fort Knox Historic Site, turning over management to the Friends of Fort Knox, a nonprofit organization that had previously provided tours and other services at the park. Friends will lease the operation of the park for four years&mdash;collecting admission revenues and paying a 15 percent portion of gross revenues back to the state as an annual lease payment&mdash;and it will take over all facility and grounds maintenance, in addition to other day-to-day operations.<sup><a href="#refD3">3</a><a name="citeD3"></a></sup> The state&rsquo;s Bureau of Parks and Lands retains the authority to approve any modifications to historic facilities and any proposed entry fee changes.</li>
<li><strong>Texas</strong>: The Texas Parks and Wildlife Department issued a request for proposals in July 2012 seeking official corporate sponsors in an attempt to supplement declining state parks funding with outside revenue. Authorized in a 2011 state law, the agency solicitation envisions a range of sponsorship opportunities that include limited advertising at parks and the ability to use the official corporate partnership designation in company marketing materials. State officials anticipate the new program could generate at least $1 million in outside corporate support, according to the <em>Austin American-Statesman</em>.<sup><a href="#refD4">4</a><a name="citeD4"></a></sup> Bids were due in August 2012, and at press time the agency was still evaluating responses.</li>
</ul>
<p>(<em>Editor's note: Portions of this article were derived from Reason Foundation&rsquo;s January 2013 study, "</em><a href="http://reason.org/news/show/parks-20-operating-state-parks-thro">Parks 2.0: Operating State Parks through Public-Private Partnerships</a>," by Leonard Gilroy, Harris Kenny and Julian Morris.)</p>
<p style="font-size: 85%;"><strong>&raquo;</strong> <a href="http://reason.org/news/show/apr-2013-state-privatization">Return to <em>Annual Privatization Report 2013: State Government Privatization</em></a><br /><strong>&raquo;</strong> <a href="http://reason.org/news/show/annual-privatization-report-2013">Return to&nbsp;<em>Annual Privatization Report 2013</em> homepage</a></p>
<hr />
<p><strong>Endnotes</strong></p>
<p><a name="refD1"></a><sup><a href="#citeD1">1</a></sup> Max Taves, &ldquo;Private Fix for Public Parks,&rdquo; <em>The Wall Street Journal</em>, June 17, 2012.</p>
<p><a name="refD2"></a><sup><a href="#citeD2">2</a></sup> Niki Kelly, &ldquo;Pence sees nuclear energy future,&rdquo; <em>Fort Wayne Journal Gazette</em>, August 29, 2012.</p>
<p><a name="refD3"></a><sup><a href="#citeD3">3</a></sup> Bridget Brown, &ldquo;Details of Fort Knox privatization lease released,&rdquo; <em>Bangor Daily News</em>, April 12, 2012.</p>
<p><a name="refD4"></a><sup><a href="#citeD4">4</a></sup> Asher Price, &ldquo;State Parks and Wildlife Department turns to corporate sponsorships to raise money,&rdquo; <em>Austin American-Statesman</em>, July 29, 2012.</p>1013280@http://www.reason.orgMon, 22 Apr 2013 00:00:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Developments in State Government Privatizationhttp://www.reason.org/news/show/apr-2013-state-privatization
Annual Privatization Report 2013 <p>The <em>State Government Privatization</em> section of Reason Foundation's&nbsp;<a href="/apr2013"><em>Annual Privatization Report 2013</em></a> provides an overview of the latest on privatization and public-private partnerships in state government. Subsections include:</p>
<p style="padding-left: 30px;">A. <a href="/news/show/apr-2013-state-budget-update" target="_blank">State Budget Update</a></p>
<p style="padding-left: 30px;">B. <a href="/news/show/apr-2013-state-lottery-privatizatio" target="_blank">Privatization of State Lottery Management</a></p>
<p style="padding-left: 30px;">C. <a href="/news/show/apr-2013-social-impact-bonds" target="_blank">The Emergence of Social Impact Bonds: Paying for Success in Social Service Innovation</a></p>
<p style="padding-left: 30px;">D. <a href="/news/show/apr-2013-state-parks-privatization" target="_blank">California Pioneers Public-Private Partnerships for Private Operation of State Parks</a></p>
<p style="padding-left: 30px;">E. <a href="/news/show/apr-2013-higher-education" target="_blank">Higher Education Public-Private Partnerships Update</a></p>
<p style="padding-left: 30px;">F. <a href="/news/show/apr-2013-liquor-privatization" target="_blank">State Liquor Privatization Update</a></p>
<p style="padding-left: 30px;">G. <a href="/news/show/apr-2013-social-infrastructure-ppp" target="_blank">Social Infrastructure Public-Private Partnerships Update</a></p>
<p style="padding-left: 30px;">H. <a href="/news/show/apr-2013-child-welfare-privatizatio" target="_blank">Child Welfare Privatization Update</a></p>
<p style="padding-left: 30px;">I. <a href="/news/show/apr-2013-state-privatization-misc" target="_blank">State Privatization News and Notes</a></p>
<p style="font-size: 85%;"><strong>&raquo;</strong> <a href="http://reason.org/news/show/annual-privatization-report-2013" target="_blank">Return to&nbsp;<em>Annual Privatization Report 2013</em> homepage</a></p>1013233@http://www.reason.orgMon, 22 Apr 2013 00:00:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Annual Privatization Report 2013http://www.reason.org/news/show/annual-privatization-report-2013
<p>Now in its 26th year of publication, Reason Foundation's <em>Annual Privatization Report</em>&nbsp;is the world's longest running and most comprehensive report on privatization news, developments and trends.</p>
<p><em>Annual Privatization Report 2013</em>&nbsp;(<em>APR 2013</em>) details the latest on privatization and government reform initiatives at all levels of government. The individual sections include:</p>
<ul>
<li><a href="http://reason.org/news/show/apr-2013-air-trans-privatization" target="_blank">Air Transportation</a></li>
<li><a href="http://reason.org/news/show/apr-2013-privatization-road-highway" target="_blank">Surface Transportation</a></li>
<li><a href="http://reason.org/news/show/apr-2013-federal-privatization" target="_blank">Federal Government Privatization</a></li>
<li><a href="http://reason.org/news/show/apr-2013-state-privatization">State Government Privatization</a></li>
<li><a href="http://reason.org/news/show/apr-2013-local-privatization">Local Government Privatization</a></li>
<li><a href="http://reason.org/news/show/apr-2013-education">Education</a></li>
<li><a href="http://reason.org/news/show/apr-2013-criminal-justice">Criminal Justice and Corrections</a></li>
</ul>
<p>[Note to readers: In contrast to previous editions, <em>Annual Privatization Report 2013</em> marks the first time the report has been published entirely in HTML format. Please note that there is no PDF version of the full report or any of its sections.]</p>
<p>Your comments on <em>Annual Privatization Report 2013</em> are important to us. Please feel free to contact us with questions, suggestions or for more information. For the most up-to-date information on the rapidly changing privatization world, please visit Reason's <a href="/areas/topic/privatization">privatization research archive</a> and our policy blog, <a href="/blog">Out of Control</a>.</p>
<p>Leonard C. Gilroy, Editor<br />Director of Government Reform, Reason Foundation<br /><a href="mailto:leonard.gilroy&#64;reason.org">leonard.gilroy&#64;reason.org</a></p>
<p>Harris Kenny, Editor<br />Policy Analyst, Reason Foundation<br /><a href="mailto:harris.kenny&#64;reason.org">harris.kenny&#64;reason.org</a></p>1013277@http://www.reason.orgMon, 01 Apr 2013 00:00:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)Parks 2.0: Operating State Parks through Public-Private Partnershipshttp://www.reason.org/blog/show/parks-2-0-operating-state-parks
<p>Yesterday we had the privilege of having our new policy study&mdash;&ldquo;<a href="http://www.leadingwithconservation.org/wp-content/uploads/2013/01/CLC_III-Gilroy_Kenny_Morris_1.3.13.pdf" target="_blank">Parks 2.0: Operating State Parks through Public-Private Partnerships</a>&rdquo; (Parks 2.0) &mdash;published by the <a href="http://www.leadingwithconservation.org" target="_blank">Conservation Leadership Council</a> (CLC). Our paper is <a href="http://www.leadingwithconservation.org/reports/" target="_blank">one of six</a> commissioned by CLC on a range of environmental topics intended to offer a set of actionable recommendations that focus on private sector and market-based policy initiatives reflecting the CLC&rsquo;s principles of limited government, community leadership and public-private partnerships.</p>
<p>The papers were launched yesterday at an event hosted by CLC in Washington, D.C. that included Gale Norton, former U.S. Interior Secretary and former Colorado Attorney General; Ed Schafer, former U.S. Agriculture Secretary and former North Dakota Governor; and Lynn Scarlett, former Deputy Secretary of the Interior (and former Reason Foundation president). The event was recorded by C-SPAN and is <a href="http://www.c-spanvideo.org/program/ConservationPo" target="_blank">available online here</a>.</p>
<p><a href="http://www.leadingwithconservation.org/wp-content/uploads/2013/01/CLC_III-Gilroy_Kenny_Morris_1.3.13.pdf" target="_blank">Parks 2.0</a> acknowledges that the ongoing fiscal challenges facing state governments are creating an existential crisis for state parks. With budgets stretched increasingly thin, state parks must compete for limited funds with other (usually higher) policy priorities like education, health care, public pensions and public safety. These budget pressures have prompted policy makers in California, New York, Florida, Arizona, Georgia, Massachusetts and other states to close or significantly reduce services in hundreds of state parks, or at minimum reduce parks budgets, nationwide. In other states, like Washington and South Carolina, governors and legislatures have recently launched efforts to require parks to become self-sufficient to wean them off state appropriations, in seeming recognition that parks funding will increasingly be crowded out by other spending priorities.</p>
<p>Yet state parks remain popular while their maintenance needs continue to worsen; according to America&rsquo;s State Parks Foundation, state parks received 725 million visitors at over 6,000 sites around the country in 2010 alone. Can this popularity be turned from a cost into a benefit? One way to keep state parks open without imposing additional burdens on the taxpayer is to utilize public-private partnerships (PPPs).&nbsp;</p>
<p>Many states already successfully use private concessionaires to provide piecemeal services within parks&mdash;including food, retail, lodging, marinas, and other commercial activities&mdash;so a shift to more extensive involvement can build on that. Such a whole park operation PPP would transfer the responsibility of maintaining the park to a private operator, while enabling that operator to raise revenue through entrance and other fees. The U.S. Forest Service has used this PPP model for over 25 years to operate thousands of its developed recreation areas nationwide, and in 2012 California began the first state to turn over the operation of state parks to private recreation management companies to avoid closure.</p>
<p><a href="http://www.leadingwithconservation.org/wp-content/uploads/2013/01/CLC_III-Gilroy_Kenny_Morris_1.3.13.pdf" target="_blank">Parks 2.0</a> seeks to describe such a PPP model and explain how it can best be applied to the operation of state parks. Reason Foundation has been on the forefront of this issue for years, both by conducting research and engaging in policy implementation. For example, last year we <a href="http://reason.org/blog/show/california-state-parks-rfp" target="_blank">outlined</a> the state of California&rsquo;s decision to issue a request for proposals (RFP) for private operation of five state parks. Our <em>Annual Privatization Report 2011: State Government Privatization </em><a href="http://reason.org/files/state_annual_privatization_report_2011.pdf" target="_blank">detailed</a> steps taken towards partnering with for-profit and nonprofit operators for state parks operation across the U.S. And a 2010 ReasonTV video <a href="http://www.youtube.com/watch?v=QbMq5mWN6-Y" target="_blank">suggested</a> that PPPs, not a proposed new tax on car registration, offered a more sustainable solution to the state&rsquo;s park funding challenges. Watch the full ReasonTV video below:</p>
<p><iframe frameborder="0" height="275" src="https://www.youtube-nocookie.com/embed/QbMq5mWN6-Y?rel=0" width="489"></iframe></p>
<p>To learn more about the Conservation Leadership Council <a href="http://www.leadingwithconservation.org/" target="_blank">visit their website</a> and <a href="http://www.c-spanvideo.org/program/ConservationPo" target="_blank">watch the CSPAN event here</a>. To learn more about Parks 2.0, read our study &ldquo;Parks 2.0: Operating State Parks through Public-Private Partnerships,&rdquo; <a href="http://www.leadingwithconservation.org/wp-content/uploads/2013/01/CLC_III-Gilroy_Kenny_Morris_1.3.13.pdf" target="_blank">available online here</a> and visit Reason Foundation&rsquo;s <a href="http://reason.org/areas/topic/parks-and-recreation" target="_blank">Parks and Recreation Research Archive here</a>.&nbsp;</p>
<p>&nbsp;</p>1013197@http://www.reason.orgWed, 09 Jan 2013 20:00:00 ESTleonard.gilroy@reason.org (Leonard Gilroy)A Public-Private Partnership Could Help the ABQ BioPark Zoohttp://www.reason.org/news/show/abq-biopark-zoo-ppp
<p>In nature, endangered animals fight for their lives against threats like poachers and predators. In government-run zoos, they face a threat of a different kind: budget woes. This problem has only gotten worse with local governments facing harsh budget realities across the U.S. in the years following the Great Recession. Meanwhile zoos like the ABQ BioPark Zoo remain far below competing budget priorities on the government food chain such as public safety and public works. Nationally, public-private partnerships (PPPs) have emerged as the preferred alternative to bare bones operations, and should be considered as a streamlining tool for Albuquerque as well.</p>
<p>Government-run zoos have a lot to lose in economic downturns. According to CNNMoney, government funding constitutes an average of <a href="http://money.cnn.com/2011/05/19/news/economy/bronx_zoo_budget_cuts/index.htm" target="_blank">40 percent of public zoo budgets</a>. Budget cuts are forcing zoos to make up for funding shortfalls by laying off workers, cutting education programs, reducing operating hours, deferring maintenance and raising ticket prices. Emergency measures like this tend to detract from core zoo functions such as educating the public, encouraging environmental awareness and promoting biodiversity.</p>
<p>For the ABQ BioPark Zoo, <a href="http://www.bizjournals.com/albuquerque/blog/morning-edition/2012/11/berrys-new-abq-biopark-fees-pared-down.html" target="_blank">ticket prices have been a subject of ongoing debate</a> between Mayor Richard Berry&rsquo;s administration and the City Council after Mayor Berry raised fees from $7 to $10 last summer. Two weeks ago the City Council voted to lower fees to $9. Meanwhile Albuquerque&rsquo;s chief operations officer John Soladay recently explained the zoo has <a href="http://www.abqjournal.com/main/2012/10/02/news/city-council-delays-zoo-fee-decision.html" target="_blank">$18 million in deferred maintenance</a>, according to the <em>Albuquerque Business Journal</em>.</p>
<p>PPPs offer a tool to address budget woes for both zoos and governments in situations like this because they can eliminate or significantly reduce the amount of taxpayer money going to zoos and increase private support by transforming fundraising and zoo operations.</p>
<p>Under a PPP the government seeks a private partner, typically a nonprofit, to assume day-to-day operations and maintenance of the zoo (taking it out of the government food chain.) This promotes better or similar service while eliminating or reducing taxpayer support. PPPs depoliticize zoos and allow them to run like other mission-driven public amenities such as museums, while maintaining public oversight and ownership. Non-profit zoo advocacy groups, like the New Mexico BioPark Society, are often logical partners because they&rsquo;re already fulfilling current duties such as fundraising, coordinating volunteer efforts, organizing special events and providing educational programming at the zoo.</p>
<p>PPPs can transform fundraising by replacing uncertain public subsidy with committed private support. Privately run zoos generally receive a higher dollar value in charitable donations than government-run zoos because donors are more confident their funding will go to its intended source. After Dallas signed a PPP for its zoo in 2009, the nonprofit operator (the Dallas Zoological Society) persuaded four donors to pledge $2.25 million to revamp the facilities.</p>
<p>The growth of zoo PPPs over time demonstrates how powerful of a policy tool it really is. In 1991 only 40 percent of the accredited zoos in the U.S. were privately operated. The proportion of privately run zoos has since increased to approximately 75 percent of all accredited zoos and aquariums. This includes major city zoos in Atlanta, Chicago, Denver, Phoenix, Houston, Seattle and elsewhere.</p>
<p>Tulsa, Oklahoma recently successfully implemented a PPP with the newly created non-profit, Tulsa Zoo Management, Inc. (TZMI), which was highlighted in Reason Foundation&rsquo;s latest <em><a href="http://reason.org/publications/annualprivatizationreport/" target="_blank">Annual Privatization Report</a></em>. Facing $10 million in budget cuts that had to be decided upon within 45 days, and with 70.3 percent of polled citizens supporting public-private partnerships of parks and recreation, Tulsa privatized the 78-acre complex. TZMI successfully took over funding and management raising $1 million for delayed capital improvements, and cut city funding of the operating budget by nearly 60 percent. TZMI also plans to replace 12 positions that were lost in 2010 due to budget cuts, and additionally to hire another 14 positions.</p>
<p>Skeptics of PPPs fairly fear that the focus of the zoo may turn from education to entertainment, transforming the zoo into an amusement park. However, elected officials sign and oversee PPP contracts in which they can (and normally do) include language restricting how private partners can operate the zoo and how much they can charge. Additionally, zoo-goers expect a natural environment; so maintaining that aesthetic is essential for any new operators&rsquo; success. Many public-turned-private zoos have seen high success rates, as well as those that were traditionally private. For example the Philadelphia zoo, the oldest zoo in U.S. history, has been privately operated by the Philadelphia Zoological Society since 1859.</p>
<p>The benefits of a PPP could potentially outweigh the cost of maintaining the status quo. Three out of four accredited zoos and aquariums are now privately operated in the U.S., and the ABQ BioPark Zoo should consider joining their ranks. A well-structured PPP would focus scarce taxpayer dollars to fund essential city services and in the long run will leave the zoo, and the citizens of Albuquerque, better off.</p>
<p><em>Katie Furtick and Harris Kenny are policy analysts at Reason Foundation (<a href="http://reason.org" target="_blank">reason.org</a>), a Los Angeles-based think tank.</em></p>1013144@http://www.reason.orgMon, 19 Nov 2012 00:00:00 ESTinfo@reason.org (Katie Furtick)California Parksâ?? â??Special Fundâ? and the Health of Golden State Recreationhttp://www.reason.org/blog/show/california-parks-special-fund-and-t
<p><a href="http://www.pewstates.org/projects/stateline/headlines/best-of-statereads-california-parks-director-resigns-after-budget-revelations-85899407188" target="_blank">Recent</a> <a href="http://blogs.kqed.org/newsfix/2012/07/20/state-parks-chief-resigns-agency-found-sitting-on-54-million/" target="_blank">revelations</a> from <a href="http://www.sacbee.com/2012/07/21/4646682/hidden-parks-funds-spark-outrage.html#storylink=cpy" target="_blank">the California Department of Parks and Recreation</a> point to $54 million in special funds squirreled away during a time when budget deficits are forcing nearly one quarter of all California parks to shutter their doors. This money, accumulated over the course of 12 years, was enough to cover the department&rsquo;s cuts several times over. Several top officials at the department have been forced to resign because of the department&rsquo;s lack of transparency in this time of fiscal trouble, including Ruth Coleman, the longest-running parks director in state history, and her heir apparent. All involved claim no knowledge of the funds&rsquo; existence.</p>
<p>While this scandal has brought to light what appears to be a case of government mismanagement and unaccountability, it has also been a proof-of-concept for the decentralized creation of public goods. Most of the 70 State Parks that lost their funding were saved by a combination of <a href="http://www.californiareport.org/archive/R201203120850/a" target="_blank">nonprofits</a> and <a href="http://blogs.kqed.org/newsfix/2012/07/13/whatever-it-takes-city-of-benicia-pays-calif-to-keep-state-park-open/" target="_blank">local governments</a> who wanted to keep them open to protect their own interests. If more parks were set to close, it is likely even more outside funding would come out of the woodworks to protect them. While this sudden drop of dozens of state recreational facilities is nearly unprecedented, <a href="http://reason.org/blog/show/stossel-gets-it-right-on-parks-priv" target="_blank">transferring the operations</a> of such properties is becoming increasingly <a href="http://reason.org/news/show/dont-close-state-parks-lease-them" target="_blank">popular</a>, along with the leasing or privatization of other venues such as <a href="http://reason.org/news/show/zoo-privatization-2011" target="_blank">zoos</a> and <a href="http://reason.org/news/show/library-privatization-2011" target="_blank">libraries</a>.</p>
<p>These new funds potentially could have kept some of California&rsquo;s State Parks open for a few more years. Unfortunately, these are one-time sources of revenue rather than a permanent solution to the department&rsquo;s budget deficit. The biggest fall-out from all of this is that it could make reaching such permanent solutions more difficult. Already, Sonoma County park advocates decided to cancel a local sales tax ballot measure which was set to provide long-term funding for the area&rsquo;s closing State parks. Strangely, supporters who claimed the State&rsquo;s financial mismanagement was &ldquo;just too much [to overcome],&rdquo; are putting financial responsibility for these important assets back into the State&rsquo;s hands.</p>
<p>Maybe Ms. Coleman, who was known for advancing outdoor recreation and forging partnerships with corporations and nonprofits, did not do such a bad job after all. By not announcing these funds, she at once concentrated park funding in California&rsquo;s most popular parks where they could do the most good, while simultaneously making sure parks in underserved areas remained <a href="http://www.californiareport.org/archive/R201203050850/a" target="_blank">permanently funded</a> through private and local sources of income.</p>
<p>In the end, this news is a surprising change of pace: government officials irresponsibly saving money instead of <a href="http://blogs.ajc.com/jamie-dupree-washington-insider/2012/07/20/gsa-under-fire-over-another-conference/" target="_blank">irresponsibly</a> <a href="http://reason.com/blog/2011/09/22/reason-writers-around-town-mat" target="_blank">spending</a> <a href="http://reason.com/blog/2012/04/02/did-the-3200-mindreader-hired-for-a-govt" target="_blank">it</a>.</p>
<p>With budgets strained tighter than ever it is becoming increasingly necessary to have legislators more informed and accountable. For further insight, check <a href="http://www.cafwd.org/reporting/entry/legislature-fails-to-keep-sacramento-honest" target="_blank">here</a>.</p>1013038@http://www.reason.orgThu, 02 Aug 2012 09:00:00 EDTinfo@reason.org (David Aloyts)Milpitas Public Works Partnership Belies California Dysfunctionhttp://www.reason.org/blog/show/milpitas-public-works-partnership-b
<p>California: The ready and willing standard bearer of political dysfunction. When its lawmakers aren't busy pretending to balance a $92 billion budget (turns out they <a href="http://www.mercurynews.com/breaking-news/ci_20891573/fact-check-democrats-not-done-calif-budget" target="_blank">relied on gimmicks</a> to close a $15.7 billion budget deficit), they're <a href="http://reason.org/news/show/adrian-moore-ban-happy-busybodies-p" target="_blank">getting ban-happy</a> by legislating everything from over-the-counter cold medicine to foie gras. But before you lose hope in the Golden State, turn your eyes to Milpitas in Santa Clara County.</p>
<p>Last week the Milpitas City Council announced their first-ever public works public-private partnership to rightsize the department. The city's public works department came under fire over the past year due to deteriorating park conditions ranging from broken irrigation systems and dead shrubbery, to graffiti and vandalism marring benches. Rather than accept city staff promises to restore conditions over the course of three years, policymakers turned to the private sector.</p>
<p>The City Council voted to award two related contracts to Colorado-based Terracare Associates for park and street landscaping, and repair services. The <em>Milpitas Post</em> <a href="http://www.mercurynews.com/milpitas/ci_20850434/contract-approved-parks-streets" target="_blank">reports</a>:</p>
<blockquote>
<p>Under its parks maintenance contact, Terracare will be paid an annual base price of $1,326,155 for the first two years and $1,369,638 for years three through five. The contract for these services is for one year with four one-year options for renewal, city reports state.</p>
<p>Terracare will be charged with maintaining 24 city parks and sports fields with equipment and personnel to provide routine landscape maintenance services, pruning, trash pick-up, weed removal, turf care, plant replacements, irrigation system maintenance and fixture and equipment repair services.</p>
<p>Under its streetscape maintenance and repair contract, Terracare will receive an annual not-to-exceed amount of $125,218 for all aspects of landscape and irrigation system maintenance for the city's landscaped streetscapes, medians and rights of way.</p>
<p>The council's approval allows the city manager to grant yearly increases pursuant to the contract without further city council action. Terracare was chosen above three other similar firms and was determined to be the most advantageous to the city, reports state.</p>
</blockquote>
<p>This is a small step towards solving the overwhelming political dysfunction at California's state and local level; but for parkgoers and motorists in Milpitas, partnerships like this make all the difference. For more on local government privatization, see Reason Foundation's <em>Annual Privatization Report 2011: Local Government Privatization</em> available online <a href="http://reason.org/studies/show/annual-privatization-2011-local" target="_blank">here</a>.</p>1012954@http://www.reason.orgTue, 19 Jun 2012 18:21:00 EDTinfo@reason.org (Harris Kenny)The Year 2011 in State Government Privatization and Public-Private Partnershipshttp://www.reason.org/blog/show/state-government-apr-2011
<p>The rollout of Reason Foundation's <a href="http://reason.org/apr2011"><em>Annual Privatization Report 2011</em></a> begins today with the release of the <a href="http://reason.org/studies/show/annual-privatization-2011-state">State Government Privatization</a> section, which I co-authored with Reason's Lisa Snell. This section of <em>APR 2011</em> provides an overview of the latest on privatization and public-private partnerships in state government. Topics include:</p>
<ul>
<li>In New Jersey, the Christie administration continued to expand its portfolio of privatization initiatives in 2011, which included highway maintenance, manual toll collection, state-run horse racing facilities, vehicle fleet operation, the NJ Network TV station and more.</li>
<li>Two ratings agencies upgraded Louisiana's credit rating in 2011, citing the state's strong fiscal management, strong employment levels and sustainable levels of public debt. Privatization remained a central feature of the Jindal administration's fiscal management in 2011, with progress on some of its major healthcare privatization initiatives in Medicaid delivery, public employee health care and behavioral health services.</li>
<li>New Ohio Gov. John Kasich has already taken significant steps to advance privatization as a key component of his governing agenda, including privatizing the state's economic development agency, selling a state prison to a private operator, and hiring advisors to analyze the potential privatization of the Ohio Turnpike and Ohio Lottery.</li>
<li>In late 2011, Washington State became the first state since the end of Prohibition in 1932 to fully privatize the sale and distribution of liquor, and several other states, including Pennsylvania and Virginia, considered similar moves. Today, 33 states have completely private wholesale and retail trade in liquor, while 17 states still retain a state-run wholesale and/or retail liquor monopoly.</li>
<li>Puerto Rico continued to emerge as a leader in attracting private investment in public infrastructure, with public-private partnerships undertaken or underway in 2011 that include a modernization of 100 K-12 schools, a $1.5 billion toll road lease and an ongoing procurement for a long-term lease of San Juan's international airport.</li>
<li>In 2011, both Texas and Connecticut enacted broad-ranging laws to authorize private sector financing for infrastructure assets.</li>
<li>As state park systems continued to face significant fiscal pressures in 2011, policymakers in states like Arizona, Utah and California took steps to expand the use of private for-profit and nonprofit operators to take over state parks threatened with closure.</li>
<li>Illinois' groundbreaking lottery privatization program got underway in 2011, an initiative designed to generate an additional $1 billion in revenues to the state over the next five years. Policymakers in California, New Jersey, and Ohio are considering similar moves.</li>
<li>After years of implementation challenges that prompted a dramatic overhaul, Indiana's privatized welfare eligibility modernization program significantly improved its performance in 2011, prompting federal officials to authorize its expansion throughout the state and award the state $1.6 million in recognition of its progress at reducing its error rates for food stamp processing.</li>
<li>Other topics include public-private partnerships in higher education, an update on state child welfare privatization systems and more.</li>
</ul>
<p>&raquo; <a href="http://reason.org/studies/show/annual-privatization-2011-state"><em>Annual Privatization Report 2011: State Government</em></a><br />&raquo; <a href="http://reason.org/apr2011">Complete <em>Annual Privatization Report 2011</em> homepage</a></p>1012842@http://www.reason.orgTue, 24 Apr 2012 15:53:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)California Issues RFP for Private Operation of 5 State Parkshttp://www.reason.org/blog/show/california-state-parks-rfp
<p>For years, Reason Foundation has recommended that cash-strapped states consider tapping the private sector to take over operations of state parks as a means to lower costs and rescue parks threatened with closure in a difficult budget environment. Both the U.S. Forest Service (USFS) and BC Parks (British Columbia) have long pioneered the use of public-private partnerships (PPPs) for park operations, but states have been slow to follow their lead&hellip;until now, that is.</p>
<p>California State Parks (CSP) has issued a new request for proposals (RFP) seeking a five-year concession contract (or contracts) to operate campground and day use recreational areas at five park units in the Central Valley (Turlock Lake SRA, McConnell SRA, George J. Hatfield SRA, Woodson Bridge SRA, and Brannan Island SRA). This is the first serious and robust parks PPP procurement of its kind at the state level. The RFP is <a href="http://www.parks.ca.gov/pages/22374/files/Valley%20RFP%20%20Final%203-9-12.pdf">here</a>, and CSP's sample contract is <a href="http://www.parks.ca.gov/pages/22374/files/valley%20contract%203-8-12.pdf">here</a>. Bidder responses are due on May 1.</p>
<p>The contract would be structured as a concession, a commercial lease through which the state would retain ownership and control over the parks while paying the private operator nothing to operate them. Instead, the private operator would be allowed to retain the user fee revenues (e.g., gate entry fees, camping fees, etc.), in return for an obligation to pay a set percentage back to the state annually as a form of rent. CSP has set a minimum annual rent level for each park that bidders must exceed in their proposals. Bidders can submit proposals for individual parks, but the procurement is designed to give maximum weight to those proposals that cover all five parks. In fact, the parks in question appear to be a mix of revenue generating and revenue losing parks (once operating costs are factored in), so bundling all of them together is likely to be an attractive option to bidders to maximize their ability to mitigate risks.</p>
<p>Up to now, states have only tinkered with this management approach&mdash;with <a href="http://reason.org/files/state_annual_privatization_report_2010.pdf#page=24 ">more talk than action</a>, generally speaking&mdash;so California's procurement represents a paradigm shift in state parks management, albeit a well proven one. The "whole park concession" model being pursued in California is the same PPP concession model used by the USFS for the operation of hundreds of their fee-based recreation areas across the country for more than 25 years now. I routinely visit and camp at concessionaire-operated USFS recreation areas throughout Arizona&mdash;there are dozens in that state alone&mdash;and can attest to top quality operations and service, far higher than at the state-run parks nearby. In fact, if it weren't for a different logo on camp hosts' shirts, one might never even realize that the parks were not operated by the USFS directly. California also has dozens of USFS "whole park concession" contracts today too, so park users can go see for themselves that there's nothing to fear&mdash;and everything to gain&mdash;through shifting to PPPs.</p>
<p>See for yourself in this October 2010 <a href="http://reason.tv/video/show/prop-21-why-california-doesnt">Reason.tv video</a> we shot at privately operated USFS recreation areas in the Sedona area. The video recommends concession management as an alternative to the misguided car tax for parks (Prop 21) that failed at the polls in California in November 2010.&nbsp;For more details on how the parks PPP model works, see these other Reason Foundation highlights:</p>
<ul>
<li><a href="http://reason.org/blog/show/private-sector-can-rescue-stat">Private Sector Can Rescue State Parks Headed for Closure</a></li>
<li><a href="http://reason.org/news/show/taking-virginia-state-parks-off-boo">Taking State Parks off the State's Books</a></li>
<li><a href="http://reason.org/news/show/virginia-state-parks-part2">Taking State Parks off the State's Books, Part II</a></li>
<li><a href="http://reason.org/news/show/dont-close-state-parks-lease-them">Don't Close State Parks; Lease Them</a></li>
<li><a href="http://reason.org/blog/show/balancing-california-budget-parks">Balancing California&rsquo;s Budget and Preserving State Parks</a></li>
<li><a href="http://reason.org/blog/show/ca-prop-21-tax-cars-to-pay-for-park">California's Prop 21: Tax Cars to Pay for Parks?</a></li>
</ul>
<p>And last week, the Franklin Center's Steve Greenhut penned an excellent <a href="http://reason.com/archives/2012/03/16/how-budget-cutbacks-are-helping-californ">Reason.com article</a> on the potential for private operation of state parks in California.</p>
<p>But don't just take our word for it. The California Legislative Analyst's Office (LAO)&nbsp;<a href="http://www.lao.ca.gov/analysis/2012/resources/state-parks-030212.aspx">released a report earlier this month</a> that recommended PPPs for park operations:</p>
<blockquote>Our research finds that the USFS, as well as many provinces in Canada, currently use private companies to operate and manage entire public parks and recreation areas. Outcomes for these different arrangements vary, but the reported benefits generally include the flexibility to easily reduce or increase staffing levels and lower operating costs from the introduction of competitive bidding. Lower costs were particularly noticeable if several parks in a geographic area were packaged as a single operation, allowing for economies of scale.<br /><br />According to the provincial park system of British Columbia (BC Parks), bundling a mix of different parks (low&ndash;revenue&ndash;generating parks and high&ndash;revenue&ndash;generating parks) helps to attract potential bidders, since it is unlikely that bidders would otherwise elect to operate low&ndash;revenue&ndash;generating parks. The BC Parks also makes payments to most of their private operators to cover costs that are not recouped by park visitor fees. Even with these payments, BC Parks considers its operations model a success, because the payments, on balance, are less than the full cost of operating the parks.<br /><br />Another advantage of using private companies to operate the parks is that they generally can procure new equipment and implement new projects more quickly than the state. In addition, privately operated parks also could assist DPR with its cash flow needs by assuming some of the risks associated with operational costs (including unpredictable user demand and fee revenue). Currently, if revenues from park fees are less than projected, the department must cut its operating costs during the fiscal year to make up for this loss in revenues. If private companies operated some of the parks, they could potentially take on this risk, as well as risks resulting from reduced visitor demand and unexpected maintenance costs.</blockquote>
<p>The new RFP is an extremely positive development for park enthusiasts and users in California and elsewhere. For Californians, these parks would otherwise be slated for closure, so the PPP approach offers a lifeline to not only keep them open for public enjoyment, but to do so on a sustainable basis. By shifting revenue risk to the concessionaire, the state would take these parks out of the vicious budget loop that currently has <a href="http://www.latimes.com/news/opinion/opinionla/la-ed-parks-california-closing-20120317,0,4470243.story">dozens of parks slated for closure</a>. It may even offer an opportunity to start hacking away at the whopping <em>$1.5 billion</em> in deferred maintenance throughout the California parks system (see Figure 5 in the LAO report).</p>
<p>For those outside of the Golden State, CSP is closely watched by parks administrators in other states, and innovative moves by the market leader would set a strong example likely to be replicated in many other states where parks are threatened. According to a <a href="http://www.huffingtonpost.com/mobileweb/2012/03/08/california-park-privatization_n_1333402.html">recent Huffington Post article</a>:</p>
<blockquote>"We've gotten some pushback, but people are more and more coming to the realization that our budget has serious problems," Roy Stearns, deputy director of the California Department of Parks and Recreation, told HuffPost. "There are private companies in the Parks and Rec business that do it well. People shouldn&rsquo;t see private enterprise as a dirty word. Our main goal is to get though these tough times."</blockquote>
<p>
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</p>1012727@http://www.reason.orgTue, 20 Mar 2012 13:28:00 EDTleonard.gilroy@reason.org (Leonard Gilroy)